Suven Life Sciences Ltd Management Discussions

ECONOMIC OVERVIEW

WORLD ECONOMY

Global economic growth in 2024 remained stable yet unfiattering at 3.3% following an unprecedented series of shocks throughout the year. It matches 2023 levels, despite ongoing geopolitical stresses and conflicts.

Looking forward, though, new tari_ measures by the United States and countermeasures by its trading partners forced global growth projections to drop to 2.8% and 3% in 2025 and 2026, respectively, down from the earlier projection of 3.3% for 2025 and 2026.

Global disinflation persists, evidenced by headline inflation declining to an estimated 5.8% from 6.7% in 2023. This downward trend is expected to continue, reaching 4.3% and 3.6% in 2025 and 2026, respectively, driven by the unwinding of supply issues, despite the persistence of services inflation.

The United States economy demonstrated robust growth at a rate of 2.8% for the year, while Europe experienced stagnation with growth at a mere 0.9%. Emerging economies collectively grew at a rate of 4.3%, primarily driven by Indias expansion, although trade tensions pose significant risks.

Global trade reached a record level of US$33 trillion in 2024, marking an increase of 3.7% (equivalent to US$1.2 trillion), although this expansion was impacted by rising protectionism and disruptions in supply chains. Nevertheless, growth momentum decelerated during the latter half of the year. Trade has remained stable at the onset of 2025; however, escalating geoeconomic tensions, protectionist policies, and trade disputes indicate potential future disruptions.

Amid global uncertainties, Indias economic growth during the 2024-25 financial year emerged as a significant phenomenon, afirming its status as the fastest-growing major economy.

The GDP growth reached []%, originating from a high base and propelled by robust domestic demand, substantial government infrastructure expenditure, a resurgence in private investment and a _ourishing service sector, characterised by a marked increase in service exports.

Infiation is observed to be diminishing, as evidenced by the headline Consumer Price Index (CPI) reaching 3.34% in March 2025, marking the lowest level since August 2019. Strong demand from rural areas, a resurgence in urban consumption, and advantageous agricultural conditions have contributed to inflation stabilisation.

The price decline has enabled the Reserve Bank of Indias Monetary Policy Committee (MPC) to implement two consecutive rate cuts, reducing the repo rate to 6%, thereby ensuring liquidity within the system.

India has achieved a significant milestone in its economic growth trajectory, with cumulative foreign direct investment (FDI) inflows amounting to approximately US$40,672 million as of December 2024, representing a 27% increase compared to the same period last year. This underscores the sustained confidence of global investors in Indias market potential.

For the fiscal year 2026, Indias growth momentum appears robust, with real GDP growth projected at []%, primarily driven by sustained levels of consumption and investment. However, uncertainty looms due to global trade policies, market volatility, and US tariffs. Infiation is anticipated to stabilise within the tolerance band set by the Reserve Bank of India, while fiscal consolidation is expected to reduce the debt-to-GDP ratio significantly. In this context, the principal challenges include the creation of jobs and the diversification of exports.

Sources: Mint, PIB, Money Control, Invest India

https://www.livemint.com/economy/india-q3-gdp-growth-indias-economic-growth-accelerates-to-6-2-in-december-quarter-fy25-growth- pegged-at-65-11740738881837.html

https://pib.gov.in/PressReleasePage.aspx?PRID=2122148#:

:text=Notably%2C%20the%20year%2Don%2D,rises%20while%20fostering%20 economic%20growth.

https://www.moneycontrol.com/news/opinion/fiscal-fortitude-india-s-debt-to-gdp-record-dwarfs-shaky-g7-12927874.html

https://www.investindia.gov.in/team-india-blogs/five-indian-states-highest-fdi-fy-2024-25#:

:text=For%20FY25%2C%20India%20 recorded,confidence%20in%20Indias%20market%20potential.

Following a plateaued growth in 2023, the global pharmaceutical industry demonstrated resilience and transformation in 2024, adeptly navigating various economic, regulatory, and technological challenges while capitalising on innovation. The industry attained a market size of approximately US$1.6 trillion, propelled by strong demand for novel therapies in oncology, immunology, and obesity, despite a decline in biologics and the uptake of COVID-19 vaccines.

Emerging markets, particularly India and China, fuelled growth, with Indias pharmaceutical exports surpassing US$30 billion, reflecting a 9.39% year-on-year increase. However, developed markets like the US and Europe experienced low growth due to pricing pressures and patent expirations, with mergers and acquisitions signalling strategic consolidation to offset these losses.

Technological advancements constituted a fundamental aspect of the progress achieved in 2024. Artificial intelligence (AI) transformed the field of drug discovery, considerably decreasing development timelines, as companies utilised AI tools for various tasks, including optimising clinical trials. Furthermore, extended reality (VR/AR) and internet of things (IoT)- enabled wearable devices facilitated improved real-world data collection, thereby supporting personalised medicine, contributing to many new drug approvals.

The FDA approved multiple new drugs, including several biologics, though no GLP-1 drugs were approved. Supply chain resilience improved through blockchain and regional sourcing, addressing geopolitical disruptions, but a projected 11 million healthcare worker shortage by 2030 loomed.

Regulatory and economic headwinds posed challenges. The US Infiation Reduction Act (IRA) and EU exclusivity reductions pressured revenues, with the IRA projected to cut US pharma revenues by ~30% through 2039.

Geopolitical volatility, including US-China decoupling, led many US firms to avoid Chinese partners, prompting asset sales by firms. Despite these hurdles, leading industry opinion-makers expressed optimism for 2025, driven by digital transformation and a 5.9% CAGR forecast through 2028, though a_ordability concerns and consumer trust deficits persisted.

As we enter 2025, the pharmaceutical industry faces a mix of tech-driven progress and regulatory challenges. AI is speeding up drug discovery, with most companies training staff in AI skills. Smart supply chains using tools like RFID are growing. However, US tariffs coupled with the IRA raise costs and slow growth. A shortage of healthcare workers also adds pressure.

Amidst this landscape of evolving challenges, the pharmaceutical sector is also poised to seize a range of compelling opportunities that promise to redefine the future of healthcare and unlock new avenues for innovation and growth.

1. The global population aged 60 and older is expected to reach 2.1 billion by 2050, leading to higher health expenditures relative to gross domestic product (GDP).

2. Global use of medicines grew by 14% from 2018 to 2023, and a further 12% increase is expected through 2028, bringing annual use to 3.8 trillion defined daily doses.

3. The world is anticipating a shortage of healthcare professionals in the upcoming years, increasing stress on current workers and negatively impacting patient experiences. It opens doors for AI-driven diagnostics, self-administered therapies, and digital health tools that reduce reliance on overburdened professionals while accelerating demand for preventive medicines, home-based care solutions, and automation technologies that streamline treatment delivery.

4. Pharmaceutical companies are progressively embracing novel modalities (innovative therapeutic approaches) and mechanisms of action as they seek to build diverse and substantial portfolios to redefine care standards.

5. Drug manufacturers are increasingly targeting therapy areas deemed significant unmet needs, with many large pharmaceutical firms expanding their focus beyond traditional core areas like Alzheimers disease.

Sources: The Hindu, WHO, Sigma, Evaluate, Entrepreneur.com, ZS.com, IQVIA

https://www.thehindu.com/business/Industry/fy25-india-pharma-exports-cross-30-billion-surge-31-in-march/article69465333.ece

https://www.who.int/health-topics/health-workforce#tab=tab_1

https://www.mu-sigma.com/pharmas-value-chain-disrupted-can-the-industry-adapt-to-the-ira/

https://www.evaluate.com/pressfirelease/evaluate-forecasts-global-pharmaceutical-market-to-be-worth-1-6tn-in- 2028/#: :text=London%2C%20UK%20and%20Boston%2C%20MA,report%20published%20by%20Evaluate%20Ltd.

https://www.entrepreneur.com/en-in/news-and-trends/indias-pharma-exports-to-reach-350-billion-by-2047- report/486863#: :text=Despite%20its%20dominance%20in%20generics,%24120%2D130%20billion%20by%202030.

https://www.zs.com/insights/pharmaceutical-trends-2025-outlook-ai-supplychain-and-beyond

https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/the-global-use-of-medicines-2024-outlook-to-2028

Pharmaceutical research and development are vital in uncovering new or enhanced methods to optimise therapeutic strategies and address unmet medical needs. This advancement enhances the overall efficacy of public health initiatives and empowers healthcare professionals to provide superior patient care.

The process of developing new pharmaceuticals, from discovery to market launch, is both protracted and complex, typically necessitating approximately 12 to 15 years and incurring costs of billions of dollars.

Over the last decade, the research and development (R&D) investments within the global pharmaceutical industry have steadily increased. Notwithstanding the considerable magnitude of this market, nearly one-third of newly developed medications are able to progress from Phase II to Phase III clinical trials successfully. In addition, Phase IV studies may explore further factors influencing treatment outcomes, such as quality of life and cost-e_ectiveness.

Returns on research and development (R&D) within the global pharmaceutical industry are experiencing a notable increase. This favourable trend is primarily driven by the emergence of new research areas, such as sustainable weight management, Alzheimers disease, and mRNA treatments for rare central nervous system (CNS) disorders. Furthermore, advancements in CRISPR and gene-editing technologies are broadening applications from rare genetic disorders to neurodegenerative diseases.

The industry is confronted with challenges including escalating research and development costs, pricing pressures- especially stemming from the US Infiation

Reduction Act- and the requirement for supply chain resilience in biologics. Nevertheless, advancements in mRNA technology beyond vaccines and digital therapeutics are establishing a foundation for sustainable growth. By 2025, it is expected that research and development will increasingly integrate real-world data and decentralised trials, thereby enhancing efficiency and emphasising patient-centred drug development.

In 2024, the World Health Organizations International Clinical Trials Registry Platform (ICTRP) documented approximately 920,000 trials conducted from 1999 to June 2024, with an estimated annual addition of 40,000 to 50,000 new trials based on historical trends. For 2025, the Clinical Trials in 2025 Report by GlobalData projects thousands of planned initiations and completions, with North America being the leading region and Phase II trials being predominant. Oncology continues to be the foremost area of therapeutic focus.

Drug discovery constitutes a comprehensive process within pharmaceutical research and development (R&D) that is both prolonged and demanding yet offers considerable rewards. During the discovery phase, which represents the initial step in introducing a new drug, researchers evaluate various compounds to ascertain those eligible for advancement into medical treatments.

The process commences with identifying a novel target molecule, which may be a protein or another entity involved in the disease mechanism. Once the target has been identified, scientists must design and synthesise a new compound that will interact with the target molecule to influence or inhibit its function.

Researchers often evaluate thousands of compounds to pinpoint potential treatments. Generally, only a few of these compounds appear promising enough for additional investigation. According to The Pharmaceutical Journal, a UK-based research publication, out of every 10,000 compounds assessed during the discovery stage, only 10 to 20 advance to the development phase. Furthermore, approximately half of those beginning the development phase ultimately enter preclinical trials.

In 2024, the US Food and Drug Administration (FDA) approved 50 new drugs. Although this number is less than the 55 approvals in 2023, it raises the ten-year rolling average for new approvals to 46.5 per year, the highest level in over two decades.

Small-molecule chemical drugs persistently dominated innovation among the newly approved drugs, retaining a substantial lead. Trailing behind them are monoclonal antibodies, alongside two protein-based drugs, two small nucleic acid drugs, and one parathyroid hormone analogue.

The spectrum of diseases these newly approved drugs address is extensive, with a considerable proportion specifically aimed at rare diseases and oncological conditions. Multiple novel drugs have also been authorised in anti-infective therapies and central nervous system disorders. As observed in previous years, a significant number of these drugs are anticipated to progress through expedited approval procedures to fulfill pressing medical requirements, particularly concerning rare diseases.

Diseases of the central nervous system (CNS) encompass a broad spectrum of conditions that compromise cerebral functionality, consequently impacting overall health and daily activities. These conditions may arise from inherited metabolic disorders, infections, degenerative diseases, cerebrovascular accidents (strokes), brain tumours, or unidentified or multifactorial origins. Movement disorders, such as Parkinsons disease, dystonia, and essential tremor, represent a subset of central nervous system disorders. These conditions are characterised by the loss of sufficient, intact nervous system circuits crucial for memory formation, as observed in Alzheimers disease, or voluntary movement in certain movement disorders.

The rising incidence of CNS diseases is largely attributed to an ageing and growing global population, alongside increased exposure to lifestyle and environmental risk factors. Additionally, advances in systemic cancer treatments, while beneficial for overall survival, can paradoxically lead to more CNS metastases as patients live longer.

Although complete cures for the majority of these disorders remain elusive, the symptoms of central nervous system diseases can frequently be managed through a variety of treatment options that encompass both medical and surgical interventions. Furthermore, novel therapies are presently being explored.

Neurological disorders constitute a significant global health challenge, impacting billions and contributing to substantial disability and mortality. More than one in three individuals worldwide experience neurological conditions, establishing them as the leading cause of illness and disability on a global scale. This burden is particularly pronounced in low- and middle-income countries, where the incidence of central nervous system infections is estimated to exceed that in high-income countries.

Biopharmaceutical companies are increasingly concentrating on developing novel therapeutics for the central nervous system (CNS), including disease-modifying drugs, biologics, and gene therapies. This shift reflects a profound commitment within the industry to advance innovative treatment alternatives for CNS disorders.

In Alzheimers disease (AD), Agitation is a common behavioural symptom characterised by restlessness, increased motor activity, and potential aggression or irritability. Various factors, including pain, sleep disturbances, environmental changes, and changes in routine, can cause it. Up to 76% of Alzheimers patients suffer from neuropsychiatric symptoms, including agitation. As the global population ages, the number of individuals living with Alzheimers disease and its associated symptoms, including agitation, is expected to rise.

There is currently one approved treatment for agitation related to AD on the market. This antipsychotic carries potential side effects, including restlessness, dizziness, and an increased risk of death in older patients with dementia-related psychosis. It presents a significant opportunity for new entrants in the segment. As a result, the Agitation in Alzheimers Disease market size is projected to experience consistent growth in the coming years, especially in nations with a large and growing ageing population, like Japan and the US.

Narcolepsy is another chronic neurological disorder marked by excessive daytime sleepiness and sudden sleep attacks, even during activities. Previously, treatment was hindered by misdiagnosis and a lack of awareness. Increased awareness and treatment advancements have driven significant growth in the narcolepsy segment. Research and development are prioritised to improve symptoms and overall quality of life for those with narcolepsy.

The global narcolepsy therapeutics market is expected to reach US$ 7.50 billion by 2033 from US$ 3.74 billion in 2024, with a CAGR of 8.02% from 2025 to 2033.

Another disorder shaping the CNS space is Major Depressive Disorder (MDD), also known as clinical depression, a mental disorder characterised by persistent feelings of sadness, loss of interest, and other symptoms that significantly impair daily functioning. It involves a depressed mood or loss of interest in activities, along with several other symptoms lasting at least two weeks. Major MDD markets comprise eight developed economies, namely the US, France, Germany, Italy, Spain, the UK, Japan, and Canada.

The MDD space is a crowded and competitive market with a large number of products, the majority of which are available as inexpensive generics. The growth in this market will be driven by an increase in the patient share of several recently approved drugs, along with a handful of anticipated introductions of late-stage pipeline products.

The new pipeline products will have significantly higher therapy costs when compared with these generic products, because many of these pipeline products have novel mechanisms of action (MOAs) that will help them compete in this highly crowded market space.

In 2023, seven leading major depressive disorder markets were valued at US$5.8 billion. The IMARC Group projects that by 2034, this value will increase to US$7.1 billion, reflecting a compound annual growth rate (CAGR) of 1.88% from 2024 to 2034.

By disease: The segment pertaining to mental health therapeutics represented the highest revenue-generating sector within the global market for central nervous system therapeutics in 2024. This can be attributed to the rising prevalence of mental health disorders, including depression, anxiety, and schizophrenia, in conjunction with an increase in awareness and acceptance of mental health issues and their treatments.

Furthermore, the segment pertaining to neurodegenerative diseases is anticipated to witness the highest Compound Annual Growth in the forthcoming years. This growth can be ascribed to the escalating prevalence of conditions, including Alzheimers and Parkinsons disease, advancements in therapies that modify the progression of these diseases, and a growing elderly population that is increasingly susceptible to these conditions.

By drug class: In the year 2024, the segment of CNS stimulants produced the highest revenue within the global central nervous system therapeutics market. This growth was propelled by an increasing demand for treatments related to Attention Deficit Hyperactivity Disorder (ADHD), as well as the expanding utilisation of stimulants for managing this condition in children, adolescents, and adults.

The anticonvulsants segment is anticipated to exhibit the most significant compounded growth in the future, owing to its extensive application in the management of epilepsy, bipolar disorder, and neuropathic pain. Furthermore, developing next-generation anticonvulsants that provide reduced side effects and improved efficacy will further enhance this growth.

By distribution channel: In 2024, the hospital pharmacy sector achieved the highest revenue for central nervous system therapeutics in the global market.

This increase in revenue is ascribed to a growing incidence of hospital admissions resulting from severe neurological and psychiatric disorders, coupled with the availability of specialised central nervous system treatments in hospital settings.

However, the retail pharmacy segment is anticipated to witness the highest compounded growth, propelled by the expanding presence of retail pharmacy chains, enhanced over-the-counter availability of CNS medications, and a growing preference for outpatient treatment, particularly in emerging markets.

By market: Historically, North America is projected to retain the predominant revenue share in the forthcoming years. This can be attributed to its strong healthcare infrastructure, increased awareness regarding neurological and mental health disorders, substantial investments in research and development, and the engagement of significant market participants in advocating for the adoption of advanced CNS solutions.

The Asia Pacific region, however, is anticipated to register the highest compound annual growth, propelled by escalating healthcare expenditures, heightened awareness of neurological and psychiatric disorders, expanded access to advanced treatments, and a significantly ageing population that is more susceptible to neurodegenerative conditions.