Zenotech Laboratories Ltd Management Discussions

INDUSTRY OVERVIEW

Global Pharmaceutical Industry

The global pharmaceutical industry continues to evolve through a phase of structural transformation, supported by sustained innovation, shifting disease burden and expanding access to healthcare. Despite macro-economic pressures, including inflationary trends and geopolitical uncertainties, global health systems have demonstrated resilience, sustained growth momentum and accelerated adoption of novel therapies.

Global medicine spending remains on a steady growth trajectory and is expected to reach approximately US$ 2.4 Trillion by 2029, reflecting a projected CAGR of 5-8%. This growth is being driven by continued uptake of innovative therapies, expansion of existing brands and increasing healthcare access across emerging markets. Notably, growth patterns have become more divergent across regions, with certain developed markets witnessing moderation and emerging regions driving incremental demand.

The pace of therapeutic innovation has remained strong, with over 1,000 novel active substances launched globally over the past two decades, including 394 substances in the past five years. However, access to these innovations varies considerably across geographies. While developed markets continue to lead in availability, low and middle-income countries continue to face constraints in accessing recently launched therapies. This disparity continues to influence global usage and spending patterns.

Biologic medicines accounted for approximately 42% of new drug launches over the past five years, highlighting their growing importance in the pharmaceutical landscape. Specialty medicines, particularly those targeting chronic, complex and rare conditions, are expected to represent a growing proportion of global pharmaceutical expenditure over the next few years. At the same time, biosimilar competition is expanding, improving affordability and enabling broader patient access in several markets.

In terms of therapy areas, oncology, neurology and metabolic disorders continue to be key growth drivers. Oncology spending remains the largest contributor globally, supported by continued innovation and increasing treatment adoption. The rapid uptake of GLP-1 therapies for diabetes and obesity, particularly in developed markets, is reshaping treatment paradigms and contributing to strong growth in metabolic care. Meanwhile, advancements in neurology, including therapies for Alzheimers and mental health conditions, are expected to support future growth.

Global medicine usage trends have remained relatively flat in recent years, with overall volume growth estimated to at a low single-digitrateofaround0.8%annuallyandeffectivelyremaining flat when adjusted for population growth. While developed markets continue to exhibit high per capita consumption, emerging markets across Asia and Latin America are witnessing relatively faster growth, driven by improved access and rising healthcare awareness. However, disparities in per capita usage persist, particularly in regions such as Africa and parts of the Middle East, where infrastructure and affordability constraints remain key challenges.

Global Pharmaceutical Market

Table 1 (US$ Billion)

Region	2024	2020-2024 CAGR	2029	2024-2028 CAGR
Developed Markets	1,422	8.2%	1,945-1,975	5.5-8.5%
Pharmerging Markets	312	6.0%	375-405	3.5-6.5%
Other Markets	16	1.0%	18-22	2-5%
Global Pharmaceutical Market Markets	1,750	7.7%	2,355-2,385	5-8%

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	2024	2029	2024	2029	2024	2029	2024	2029	2024	2029
Developed Markets	77	79-81	8	7-8	9	6-8	6	5-6	1,422	1,945-1,975
Pharmerging Markets	28	28-36	34	30-37	13	10-16	25	20-27	312	375-405
Other Markets	27	14-39	52	36-67	5	3-6	16	11-19	16	18-22
Global Markets (Source: IQVIA Institute)	68	71-73	13	11-13	10	7-8	9	8-9	1,750	2,355-2,385

Developed Markets

Developed markets remain primary contributors to global pharmaceutical spending, driven by strong uptake of innovative therapies and specialty medicines. As per IQVIA, spending across developed markets reached US$ 1,422 Billion in 2024, reflecting a CAGR of 8.2% during 2020-2024.

Going forward, growth is expected to moderate, with spending projected to reach US$ 1,945-1,975 Billion by 2029, at a

CAGR of 5.5-8.5%. This moderation reflects pricing pressures, loss of exclusivity and policy interventions, partially offset by continued innovation.

Developed Markets - Pharmaceutical Spending and Growth

(US$ Billion)

Region	2024	2020-2024 CAGR	2029	2025-2029 CAGR
Top 10 Developed Markets	1,194.5	8.2%	1,635-1,665	5-8%
Other Developed Markets	227.0	7.8%	295-325	5.5-8.5%
Total Developed Markets	1,421.5	8.2%	1,945-1,975	5.5-8.5%

Pharmerging Markets

The Pharmerging markets are expected to remain a structurally important contributor to global pharmaceutical growth, combining both access-driven expansion and gradual premiumization of treatment mix.

Pharmaceutical spending across Pharmerging markets is expected to maintain a steady growth trajectory over the next five years, supported by expanding access to healthcare, rising prevalence of chronic diseases, and gradual adoption of innovative therapies across emerging economies.

Total market spending is estimated at approximately US$ 312 Billion in 2024 and is projected to increase to a range of

US$ 375 405 Billion by 2029, reflecting sustained underlying demand across both branded and non-branded segments.

Within the market, growth continues to be supported by a gradual shift towards higher-value therapies, particularly original branded medicines, which are expected to remain the fastest-growing component over the forecast period. At the same time, non-original brands and generics continue to play a significant role in expanding access and supporting treatment affordability across markets.

Pharmerging Markets Pharmaceutical Spending and Growth1 (US$ Billion)

Region	2024	2020-2024 CAGR	2029	2024-2029 CAGR
Pharmerging Markets (Source: IQVIA Institute)	312	6%	375-405	3.5-6.5%

Specialty Medicines

Specialty medicines continue to be a primary driver of value growth in the global pharmaceutical market, reflecting a structural shift toward complex, high-cost therapies targeting chronic, rare and specialty conditions. These therapies, particularly across oncology, immunology, neurology and metabolic disorders, are characterized by high clinical value, increasing innovation intensity and relatively higher treatment costs.

According to IQVIA, specialty medicines accounted for approximately 42% of global pharmaceutical spending in 2024 and are projected to increase to nearly 46% by 2029. In leading developed markets, specialty medicines already represented approximately 51% of total pharmaceutical spending in 2024 and are expected to rise further to nearly 54% by 2029, highlighting the increasing concentration of value within complex and innovative therapies.

Growth in specialty medicines is expected to be driven by continued innovation in oncology and immunology, rapid expansion of GLP-1 therapies for diabetes and obesity, increasing adoption of biologics and biosimilars, and expanding focus on rare diseases and precision medicine. At the same time, pharmerging markets are witnessing gradual growth in specialty adoption, supported by improving healthcare access and rising affordability.

Despite accounting for a relatively small share of treatment volumes, specialty medicines continue to contribute disproportionately to overall pharmaceutical spending growth, underscoring the industrys ongoing shift toward advanced and innovation-led therapies.

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

Year	2014	2019	2024	2029 - Forecast
Developed Markets	33	45	51	54
Other Developed Markets	24	31	35	38
Pharmerging Markets	8	11	14	18
Global Markets	27	36	42	46

(Source: IQVIA Institute)

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 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:

The Indian Pharmaceutical industry is expected to remain one of the most structurally resilient and fastest-growing major pharmaceutical markets globally, supported by expanding healthcare access, rising chronic disease burden, and continued deepening of prescription penetration across urban and non-urban markets.

The market is estimated to reach US$ 40 44 Billion in 2029, at a constant currency CAGR of 6.5 9.5% over 2025 2029, reflecting sustained demand across chronic and acute therapies, supported by continued expansion of treatment coverage and gradual improvement in healthcare access infrastructure.

Growth continues to be led by chronic therapies such as cardiovascular, anti-diabetic, respiratory and central nervous system segments, which are expanding faster than acute therapies due to rising disease prevalence and longer treatment cycles. This structural shift is supported by improving diagnosis rates, increasing affordability, and wider penetration of organised healthcare channels.

In addition, market growth is supported by continued expansion into Tier II and Tier III markets, increasing physician reach, and steady contribution from new product introductions. While price increases continue to play a role, volume-led expansion remains the primary structural driver of growth in the market.

Indian Pharmaceutical Spending and Growth (US$ Billion)

Region	2024	2029	2025-2029 CAGR
Indian Pharmaceutical Spending & Growth	28	40-44	6.5-9.5%

(Source: IQVIA Institute)

Specialty Medicines

Specialty medicines continue to be a primary driver of value growth in the global pharmaceutical market, reflecting a structural shift toward complex, high-cost therapies targeting chronic, rare and specialty conditions. These therapies, particularly across oncology, immunology, neurology and metabolic disorders, are characterised by high clinical value, increasing innovation intensity and relatively higher treatment costs.

According to IQVIA, specialty medicines accounted for approximately 42% of global pharmaceutical spending in 2024 and are projected to increase to nearly 46% by 2029. In leading developed markets, specialty medicines already represented approximately 51% of total pharmaceutical spending in 2024 and are expected to rise further to nearly 54% by 2029, highlighting the increasing concentration of value within complex and innovative therapies.

Growth in specialty medicines is expected to be driven by continued innovation in oncology and immunology, rapid expansion of GLP-1 therapies for diabetes and obesity, increasing adoption of biologics and biosimilars, and expanding focus on rare diseases and precision medicine. At the same time, pharmerging markets are witnessing gradual growth in specialty adoption, supported by improving healthcare access and rising affordability.

Despite accounting for a relatively small share of treatment volumes, specialty medicines continue to contribute disproportionately to overall pharmaceutical spending growth, underscoring the industrys ongoing shift toward advanced and innovation-led therapies.

Active Pharmaceutical Ingredients (APIs)

The Active Pharmaceutical Ingredients (API) segment forms the backbone of the global pharmaceutical industry, supporting both innovative and generic drug manufacturing. The market has witnessed steady expansion, driven by increasing demand for complex therapies, rising prevalence of chronic diseases, and the growing shift toward biologics and highly potent APIs. The global Active Pharmaceutical Ingredients (API) market was valued at US$ 256 Billion in 2025 and is projected to reach US$ 376 Billion by 2034, at a CAGR of 4.22% during 2026 2034. Growth is driven by several factors, including the increasing prevalence of chronic diseases, rising demand for generic and biosimilar drugs, expansion of contract manufacturing organizations (CMOs/CDMOs), and continued investment in targeted biopharmaceutical therapies.

API Market Long Term Outlook (US$ Billion)

Region	2025	2034	2026-2034 CAGR
API Market – Long Term Outlook	256	376	4.2%

(Source: IQVIA Institute)

Growth Drivers:

Rising demand for highly potent APIs (HPAPIs), particularly in oncology and targeted therapies Expansion of generic drug manufacturing due to patent expiries Increasing focus on supply chain resilience and backward integration Shift toward biotech and complex molecules, including biologics and specialty drugs

Additionally, global pharmaceutical companies are increasingly diversifying supply chains and investing in regional manufacturing capabilities, creating opportunities for integrated players.

Market Size

FY26 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.

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 8% to 10% in revenues in FY2026. 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 efficiencyof internal financial internal financial controls environment, commensurate with the size and complexity of the business, 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 3,956.20 Lakhs (Previous year 3,897.57 Lakhs) from its operations, 1.5% increase over the corresponding previous year, due to 15% increase in volumes mainly in OSD & Ophthalmic sectors which supported in maintaining the estimated revenues. The Company reported loss after tax of (107.21) Lakhs after adjusting prior period tax expenses 48.93 Lakhs against previous year reported profit after tax of

561.29 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.

The Company is engaged in the business of Pharmaceuticals, and there has been no change in the nature of the business of the Company during the financial year ended March 31, 2026.

Financial Performance

The Companys financial performance for the financial year ended March 31, 2026: ( in Lakhs)

S.No. Particulars	2025-26	2024-25
(i) Revenue from operations	3,956.20	3,897.57
(ii) Other Operating Income	405.16	407.14
(iii) Other income	230.90	154.86
(iv) Total Revenue (i+ii+iii)	4,592.26	4,459.57
(v) Depreciation	711.34	696.01
(vi) Finance cost	0	0
(vii) Other expenses	3,442.51	2,886.69
(viii) Total Expenses (v+vi+vii)	4,153.85	3,582.70
(ix) Profit/(Loss) before exceptional items and tax (iv-viii)	438.41	876.87
(x) Exceptional item	-19.51	192.32
(xi) Profit/(Loss) before tax (ix+x)	418.90	1069.19
(xii) Tax expense	526.11	507.90
(xiii) Profit/(Loss) after tax (xi-xii)	-107.21	561.29
(xiv) Other Comprehensive Income	4.67	-1.68
(xv) Total Comprehensive Income for the period (xiii+xiv)	-102.54	559.61
(xvi) Loss brought forward from previous year	-17,443.61	-18,003.22
(xvii) Profit/(Loss) carried forward to Balance Sheet (xv+xvi)	-17,546.15	-17,443.61

Key Financial Ratios:

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

S. No. Particulars	2025-26	2024-25	Variance (%)	Reasons if variance is more than 25%
1. Trade Receivables Turnover Ratio (times)	1.22	1.61	-24	Not applicable
2. Trade Payable Turnover Ratio (times)	0.38	0.29	30	This is on account of clearing dues of suppliers.
3. Inventory Turnover (times)		23.19	-100	Inventories are fully utilised and no closing balance as at 31 March 2026.
4. Interest Coverage Ratio(times)				Not applicable – Since company is debt free.
5. Current Ratio (times)	3.40	2.89	18	Not applicable
6. Debt Equity Ratio (times)				Not applicable – Since company is debt free.
7. Net Profit Ratio (%)	-2.71	14.40	-119	This is due to higher tax expense in current year.
8. Return on Capital Employed (%)	0.01	0.11	-90	This is due to reduction in profit on account of increased employee benefit and other expenses.

HUMAN RESOURCES

During the year, the strength of human resource engaged by the Company is 385.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.)