Zenotech Laboratories Ltd Management Discussions

INDUSTRY OVERVIEW Global Pharmaceutical Industry

The global pharmaceutical industry witnessed a transformative phase in the past year, driven by scientific breakthroughs, demographic shifts, evolving patient needs and rapid digitalization. Amidst evolving global health demands and economic pressures, the industry strengthened its foundation for long-term growth while adapting to structural changes across regions and therapeutic segments.

In 2024, global medicine spending continued its upward trajectory, reflecting a growing demand for chronic care, specialty treatments and innovative therapies. Total pharmaceutical spending remains on course to exceed US$ 2.3 Trillion by 2028, supported by a projected CAGR of 5-8%. While volume growth plateaued in 2023, it is expected to grow at an average rate of 2.3% through 2028, driven by emerging markets such as China, India, Southeast Asia and Latin America. These regions are poised to drive the next phase of global demand, in contrast to mature markets such as North America, Western Europe and Japan, where per capita consumption levels are already high and future growth is expected to moderate.

Therapeutic innovation has remained a key driver with increased use of specialty medicines for chronic and rare conditions, along with growing adoption of novel biologics and small molecule therapies. Oncology and immunology have continued to lead growth in therapy areas, while new developments in neurology and mental health treatments have added momentum. In particular, the rapid uptake of GLP-1 agonists for diabetes and obesity are signaling a paradigm shift in metabolic care, further reshaping usage trends.

Despite lower manufacturer net sales due to confidential rebates and pricing pressures, last few years have seen robust spending across key regions, driven by the launch of new brands and the expansion of innovative treatment options. Developed economies, while mature in terms of volume, have continued to invest in high-value therapeutics, contributing to a more diverse and innovation-led portfolio mix.

Digital transformation has advanced across the pharmaceutical value chain in last few years. Companies are adopting data- driven tools to optimize clinical trials, enhance patient targeting and strengthen supply chains. Al-enabled drug discovery, real-world evidence platforms and integrated digital health solutions are redefining how pharmaceutical organizations engage with patients and deliver care outcomes. Operational agility has also improved, supported by advancements in modular manufacturing and predictive analytics.

Global disparities in per capita consumption have persisted through last few years. High-income countries like Japan and Western Europe have recorded usage levels more than twice that of lower-income regions. While consumption is gradually rising in Africa and the Middle East, challenges in infrastructure, affordability and access continue to limit growth. These persistent gaps underscore the critical need for inclusive access strategies.

As cost pressures mount, particularly in developed economies, payers are recalibrating reimbursement models to ensure value-based outcomes. Efforts to moderate spending include greater emphasis on generics and biosimilars, performance- linked pricing mechanisms and cost-sharing arrangements with patients. Striking the balance between affordability and innovation remains a core priority for healthcare systems worldwide.

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

 

Global Pharmaceutical Market - Share by Product Type					Table 2				(% of Total)
Region	Original Brands (%)		Non-original Brands (%)		Unbranded Generics (%)		OTC, Vaccines & Others (%)		Total (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

(Source: IQVIA Institute)

Developed Markets

In developed markets, medicine spending growth is projected to range from US$ 1.775 Trillion to US$ 1.805 Trillion by 2028. This growth trajectory is driven by innovative therapeutics despite challenges from generic and biosimilar competition. Immunology treatments exhibit steady utilisation rises, with nearly half facing biosimilar competition, thereby driving increased usage. Over the forecast period, spending in developed markets is expected to accelerate, led by existing branded medicines and new products.

Developed Markets - Pharmaceutical Spending and Growth (US$ Billion)

Region	2023	2019-2023 CAGR	2028	2024-2028 CAGR
Top 10 Developed Markets	1,082	J 7.0%	J 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%

Pharmerging Markets

Medicine spending in pharmerging markets is expected to continue expanding through 2028, largely driven by increased use of generic and non-originator branded medicines. These markets remain price-sensitive and focus on improving access to basic healthcare needs, with growth primarily coming from higher volume rather than adoption of high-cost therapies.

Although some countries such as Russia and Turkey have transitioned into the other developed category due to rising healthcare spending and improvements in GDP per capita, most pharmerging markets continue to operate under constrained healthcare budgets. As a result, specialty medicines accounted for just 13% of total pharmaceutical spending in 2023, and this share is not expected to change meaningfully over the next five years.

The lower spending share on originator products reflects the broader market reliance on generics and cost-effective alternatives. Pricing levels for pharmaceutical products in these regions remain well below those in developed markets, shaped by a combination of affordability challenges and policy emphasis on essential medicines.

While the overall outlook is positive in terms of access and volume growth, limitations in infrastructure, reimbursement frameworks, and access to advanced therapies continue to constrain the broader uptake of innovation. Nonetheless, sustained efforts to expand healthcare coverage and the role of local manufacturing are likely to support continued growth across these markets.

Pharmerging Markets - Pharmaceutical Spending and Growthl

(US$ Billion)

Region	2023	2019-2023 CAGR	2028	2024-2028 CAGR
Pharmerging Markets	304	7.8%	400-430	10-13%

(Source: IQVIA Institute)

Specialty Medicines

Specialty medicines are set to become an increasingly prominent segment of global pharmaceutical spending, with their share projected to reach 43% by 2028. In developed markets, this share is expected to exceed 55%, reflecting a continued shift toward therapies targeting chronic, complex and rare conditions. This trend highlights a growing focus on precision treatment and unmet medical needs.

In contrast, specialty medicines account for a much smaller share of spending in pharmerging markets around 13%, which is likely to remain stable through 2028. Cost remains a key barrier, limiting broader access to these high-value therapies in lower-income settings.

While specialty medicines are typically used by a small portion of the population (2-3%), they play a critical role in managing serious diseases. Their continued growth underscores the evolving landscape of global healthcare, where treatment effectiveness and patient outcomes are increasingly prioritised despite higher unit costs.

Share of Specialty Products in Overall Pharmaceutical Spending - By Market (%)

Year	2013	2018	2023	2028 - Forecast
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
(Source: IQVIA Institute, 2023)

Global Injectables Industry

The global injectable drug delivery market size was estimated at USD 467,530.0 million in 2023 and is projected to reach USD 823,292.7 million by 2030, growing at a CAGR of 8.7% from 2024 to 2030. The rising prevalence of chronic diseases and increasing technological advancements are driving demand for injectable drug delivery devices. Government initiatives for various injectable drugs for chronic diseases is further fueling the market growth.

Chronic diseases such as diabetes, cancer, and autoimmune disorders are becoming increasingly common around the world. The World Health Organization (WHO) estimates chronic diseases such as diabetes, cancer and cardiovascular diseases, contribute to over 70% of deaths globally. These conditions often require long-term treatment with injectable medications, which is fueling the demand for injectable drug delivery devices. The United Nations projects the global population aged 65 or above to reach 1.6 billion by 2050. This elderly population is more susceptible to chronic diseases, further increasing the demand for injectable drug delivery devices.

The market is witnessing continuous development in new and improved devices like autoinjectors, wearable injectors and needle-free injectors. Government agencies around the world are increasingly focusing on improving healthcare access and affordability. This includes initiatives to promote the use of injectable drugs for chronic disease management. Such initiatives are expected to further propel the market growth. There is a notable shift towards self-administration of medications, as they provide convenience and empower patients to manage their health more effectively, driving the market growth.

Opthalmic eye care

The prevalence and incidence of eye infections are anticipated to grow globally. The increased awareness of the importance of maintaining good eye health and having regular eye examinations has increased the market for ophthalmic eye drops. People are becoming more aware of the early warning signs and symptoms of eye problems. Early detection and treatment of eye disorders have become more common due to this increasing awareness. As a result, it has offered opportunities for eye care practitioners and ophthalmic product makers, including eye drops. The increasing prevalence of eye-related diseases such as dry eye disease, glaucoma and other eye-related disorders is driving market expansion.

According to the American Academy of Ophthalmology, dry eye disease (DED) affects roughly 20 million individuals in the United States and 344 million people globally. Furthermore, according to the WHO 2022, at least 2.2 billion individuals globally have near or far vision impairment. As a result of the rising prevalence of cases of vision impairment throughout the world, there is an increased demand for effective treatment and drugs, which is likely to raise demand for ophthalmic eye drops, supporting market growth.

Drug delivery mechanism and formulation technology advancements have resulted in novel ophthalmic eye drops. These developments have increased the safety, efficacy, and patient compliance of eye drops. As a result, they are propelling the ophthalmic eye drops business forward. The development of preservative-free eye drops and innovative medication delivery strategies has improved treatment outcomes

Biologics & Biosimilars

The global biosimilars market size was valued at USD 20.44 billion in 2022 and is projected to grow from USD 23.96 billion in 2023 to USD 73.03 billion by 2030, exhibiting a CAGR of 17.3% during the forecast period. Europe dominated the global market with a share of 50.44% in 2022.

Biosimilars are safe, effective, and highly similar versions of approved and authorized biologics. A biological drug is a large and complex protein produced from living cells through complex manufacturing processes. A generic drug is a copy of a chemical drug. A biosimilar is similar to the original biologic, however, it is not identical. Once a patent on an authorized biologic has expired, a biosimilar may enter the market. Approval for a biosimilar is only granted after its efficiency and similarity compared to its biologic has been established. Obtaining approval for a biosimilar is easier compared to a biologic.

Moreover, the growing prevalence of chronic diseases and expensive treatment costs are increasing the demand for cost-effective solutions to reduce the economic burden of the patient population. The growing demand for a comparatively easier approval process has influenced the market players focus on introducing novel drugs that are similar to biologics, available at comparatively lower rates and intended to treat a wide range of diseases. Such initiatives are anticipated to gradually shift the preference of the patient population toward these products, which is anticipated to drive the demand for these drugs during the forecast period.

INDIAN PHARMACEUTICAL INDUSTRY:

Indias pharmaceutical market is projected to see strong growth, with medicine spending expected to reach US$ 38-42 billion by 2028, with a CAGR of 7-10% from 2024 to 2028. This growth is driven by a combination of expanding access, growing demand for treatments across both acute and chronic conditions, and continued reliance on affordable generic medicines.

In 2023, acute therapies such as anti-infectives and vitamins/minerals recorded notable volume increases, indicating a recovery in demand patterns. At the same time, chronic therapy areas like cardiac and respiratory treatments have sustained robust performance, supported by the rising burden of non-communicable diseases and improved diagnosis rates.

Indias cost-sensitive market continues to favour high-volume, lower-cost products, with generics dominating the therapeutic landscape. However, ongoing investments in domestic manufacturing, greater healthcare outreach, and increasing insurance coverage are expected to further support growth across therapy areas.

Indian Pharmaceutical Spending and Growth (US$ Billion) 022-2026

Region	2023	2028	2024-2028 CAGR
Indian Pharmaceutical Spending & Growth	27	38-42	, 7-10%

(Source: IQVIA Institute)

Growth Drivers:

- Growing Population: Indias growing population provides a larger consumer base for pharmaceutical products, driving demand.

- Expertise in Low-Cost Manufacturing: Indias proficiency in cost-effective end-to-end manufacturing processes enables competitive pricing of pharmaceutical products, both domestically and globally.

- Demographic and Lifestyle Changes: Shifts in demographics and lifestyle patterns, such as an aging population and increasing prevalence of chronic diseases, lead to higher consumption of medications, particularly chronic medications.

- Improving Affordability: Rising per capita incomes contribute to improved affordability of healthcare and pharmaceuticals, making them more accessible to a broader segment of the population.

- Government Support and Incentives: Various government schemes and incentives, such as the Production Linked Incentive (PLI) scheme, bolster the pharmaceutical industry, encouraging investment and growth.

- Increasing Access to Modern Medicines: Efforts to enhance healthcare infrastructure and distribution networks are expanding access to modern and innovative medicines across the country.

Market Size

FY25 Business Highlights

Our Company is a loan licensing company catering exclusively to Sun Pharmaceutical Industries Limited, Promoter & holding company and we are specialized contract manufacturing services /processing in parenteral depot formulations, ophthalmic, oncology oral & injectables and general injectables.

SWOT Analysis

The Strong global prominence of Indian Pharma sector with robust R&D infrastructure and capabilities to develop technologically complex products in the generics, branded generics, API and specialty segments, focus on driving growth & profitability through a pragmatic mix of organic and inorganic initiatives and the ability to supply high-quality products at affordable prices across the world are the strengths of Indian Pharma sector.

Developed markets have witnessed a consistent increase in contribution of specialty products in their overall pharmaceutical spending and this trend is expected to continue in the future. Favourable macro-economic parameters for India and emerging markets are likely to ensure reasonable volume growth for pharmaceutical products across these markets in the long term. Growing penetration of generics in Japan and opening of the China market present good long-term opportunities for Indian Pharma sector.

The current geopolitical issues give rise to uncertainties related to supply chains, inflation and overall economic growth to Indian Pharma companies. The potential fresh outbreaks of the pandemic across the world and subsequent disruption in economic activities may impact economic growth across countries and could indirectly impact pharmaceutical consumption. Given the additional spending on battling the pandemic, governments across the world may try to control pricing of certain products, which may lead to government mandated price controls on pharmaceutical products. Developing a specialty pipeline entails high upfront investments for long-term benefits, and may impact short-term profitability.

OUTLOOK

Pursuing a dynamic strategy of intra-industry partnerships, extensive emphasis on research, innovation and development, increase in-licensing technologies and assets from start-ups are some of the approaches that could be undertaken by the Indian pharmaceutical companies.

ICRA research shows that domestic pharma companies are expected to register a growth of 6% to 8% in revenues in FY2025. The operating profit margin, however, is estimated to drop slightly due to inflationary pressures. The Indian pharmaceutical industry is on an upward growth track and India is in a position to claim the spot of the worlds most preferred pharma destination in the coming years.

RISKS AND CONCERNS

Every business carries inherent risks and all of them cannot be eliminated. The management at Zenotech has been striving to minimize the known risks. Further, Pharma companies in India, will need to realign their quality and compliance structure to conform to the constantly evolving regulatory guidelines. With the FDA and other regulators broadening the scope of compliance requirements, it helps if companies have a holistic approach and make regulatory compliance part of their corporate strategy. This includes effective training, proper timely communication, periodic reviews, and support from the top management. Regulators have to focus on aligning country-specific regulatory frameworks to global standards enabling harmonization of standards and help companies drive efficiencies.

Internal Controls

The management believes that internal controls are the prerequisite of governance and that action emanating from agreed business plans should be exercised within a framework of checks and balances. The management is committed to ensuring adequate internal controls environment commensurate with the size and complexity of the business, which assures compliance with internal policies, applicable laws and regulations, ensures reliability and accuracy of records, promotes operational efficiency, protects resources and assets, helps to prevent and detect fraud, errors and irregularities and overall minimizes the risks.

Internal Financial Controls

The Company has a well-established internal financial controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal financial controls. The management is committed to ensuring an effective internal financial controls environment, commensurate with the size and complexity of the business, which provides an assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Operational Performance

During the year under review, the Company recorded revenue of Rs. 3,897.57 Lakhs (Previous year Rs. 3,676.15 Lakhs) from its operations, 6% increase over the corresponding previous year, due to marginal increase in volumes for sterile formulations which supported in maintaining the estimated revenues. The Company reported profit after tax of Rs. 561.29 Lakhs as against previous year reported profit after tax of Rs. 829.87 Lakhs. Based on the projected business plans for the current and forthcoming years, the Company believes that it can maintain its positive performance by utilizing its resources to its maximum.

Your Company is constantly striving to optimize its operational capacities, restricting costs to remain competitive which would help to improve the operational efficiency.

Financial Performance

The Companys financial performance for the financial year ended March 31,2025: (? in Lakhs)

S.No.	Particulars	2024-25	?2023-24
(i)	Revenue from operations	3,897.57	3,676.15
(ii)	Other Operating Income	, 407.14	407.16
(iii)	Other income	J 154.86	100.41
(iv)	Total Revenue (i+ii+iii)	4,459.57	4,183.72
(v)	Depreciation	696.01	708.52
(vi)	Finance cost	0	0
(vii)	Other expenses	2,886.69	2,361.06
(viii)	Total Expenses (v+vi+vii)	3,582.70	3,069.58
(ix)	Profit/(Loss) before exceptional items and tax (iv-viii)	876.87	1,114.14
(x)	Exceptional item	192.32	0
(xi)	Profit/(Loss) before tax (ix+x)	1069.19	1114.14
(xii)	Tax expense	507.90	284.27
(xiii)	Profit/(Loss) after tax (xi-xii)	561.29	829.87
(xiv)	Other Comprehensive Income	-1.68	-2.72
(xv)	Total Comprehensive Income for the period (xiii+xiv)	559.61	827.15
(xvi)	Loss brought forward from previous year	-18,003.22	-18,830.36
(xvii)	Profit/(Loss) carried forward to Balance Sheet (xv+xvi)	-17,443.61	-18,003.22

Key Financial Ratios:

[Pursuant to Schedule V (B) to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

S. No.	Particulars	2024-25	2023-24	Variance (%)	Reasons if variance is more than 25%
1.	Debtors Turnover (times)	1.61	2.80	-42%	Due to increase debtors.
2.	Inventory Turnover (times)	23.19	21.88	6%	Due to increase in current year inventory values
3.	Interest Coverage Ratio (times)	---	---	---	Not applicable - Since company is debt free
4.	Current Ratio (times)	2.86	1.93	48%	Due to increase in cash and cash equivalents and other Bank balances
5.	Debt Equity Ratio (times)	---	---	---	Not applicable - Since company is debt free
6.	Operating Profit Margin (%)	27.43	30.31	-9.05%	?
7.	. Net Profit Margin (%)	14.40	22.57	-36%	Due to decrease in turnover
8.	Return on Capital Employed (%)	0.11	0.12	-10%	Due to decrease in turnover

HUMAN RESOURCES

During the year, the strength of human resource engaged by the Company is 325. Industrial relations have been cordial during the year under report.

(Cautionary Statement: Statements in this Report, which seeks to describe the Companys objectives, projections, estimates, expectations or predictions may be considered to be ‘forward looking statements and are stated as required by applicable laws and regulations. Actual results could differ from those expressed or implied. Several factors including global and domestic demand-supply conditions, prices, raw-materials availability, technological changes in government regulations and policies, tax laws and other statutes may affect the actual results, which can be different from what the Directors envisage in terms of future performance and outlook.