Zota Health Care Ltd Management Discussions

Global Economy

The year 2025 has unfolded amid a landscape marked by resilience, volatility, and recalibration. As the world economy transitions from the immediate post-pandemic recovery phase, new challenges have surfaced in the form of intensifying trade tensions, shifting monetary policies, and commodity market volatility. Despite these headwinds, certain structural themes such as moderating inflation, policy normalization, and the strengthening role of healthcare and essential goods sectors are shaping a cautiously optimistic outlook.

Growth Outlook: Moderation Amid Heightened Trade Uncertainty

The global economy is expected to witness slower growth in FY2025, with GDP expansion projected to ease from 3.3% in 2024 to 2.8% in 2025, before modestly recovering to 3.0% in 2026. Trade frictions, coupled with elevated policy uncertainty, continue to weigh on sentiment. Emerging markets and developing economies _EMDEs_ remain particularly vulnerable, with regions reliant on trade such as East Asia, PaciÎc, and Europe expected to experience marked slowdowns. Latin America and the Caribbean are likely to deliver the weakest performance among EMDEs, constrained by structural inefÎciencies and trade barriers. In contrast, large developing economies such as India and Indonesia are expected to remain key growth engines, underpinned by robust domestic demand and healthcare-led consumption trends. For many low-income and vulnerable nations, however, the pace of recovery will stay subdued.

Infiation and Price Trends: Signs of Moderation but Core Pressures Persist

Headline inflation has eased globally, falling from 5.6% in 2023 to an estimated 4.0% in 2024, with a further decline to 3.4% projected for 2025. Developed markets are seeing price trends move closer to central bank targets, supported by moderating commodity prices and softer labour market pressures. However, core inflation, led by the services sector, remains sticky. In developing economies, inflation is easing but continues to remain elevated in selected regions such as Africa and Western Asia. For the pharmaceutical and healthcare space, this moderation in raw material and energy costs is expected to provide some relief, though currency volatility and trade barriers may still exert cost-side pressures.

Policy Landscape: A Gradual Return Toward Normalization

Central banks are signalling a gradual move back towards neutral policy setting. The U.S. Federal Reserve is expected to lower policy rates to around 4% by end-2025, while the European Central Bank is on course to deliver 100 basis points in rate cuts this year, bringing the policy rate to 2% by mid-2025. Japan, on the other hand, is gradually tightening toward a neutral setting of 1.5% over the medium term. This calibrated monetary easing should help improve Înancial stability, a critical factor for capital-intensive sectors including pharmaceuticals, where investment in R&D and manufacturing capacity expansion is ongoing.

Currency & Commodities: Volatility Persists

Currency markets have reflected shifts in global risk sentiment, with the U.S. dollar surging ahead of the 2024 elections but giving up gains in early 2025 as growth expectations softened. Emerging market currencies initially faced pressure but have since stabilized. Commodity prices, meanwhile, have seen divergent trends. Oil declined by nearly 10% between August 2024 and March 2025, even as precious metals, aluminium, and copper witnessed gains before correcting sharply in April amid escalating trade tensions. Agricultural commodities showed mixed trends depending on weather conditions and trade barriers. For the healthcare industry, especially generics and bulk drugs, such fluctuations directly influence input costs, given dependence on global supply chains for APIs _Active Pharmaceutical Ingredients_ and intermediates.

Healthcare and Pharmaceuticals: A Resilient Anchor

Healthcare and pharmaceuticals continue to provide cyclical insulation as essential spending holds up even when broader trade conditions soften. U.S. tariff moves are provoking a strategic realignment across the global pharmaceutical landscape. While Îrms are reacting with domestic investments and supply-chain redesigns, the broader effects especially on generics, affordability, and market access will likely reverberate for years. The U.S., which remains heavily dependent on imported APIs particularly from India and China could see an erosion in supply stability and cost competitiveness owing to these tariffs. Major companies are responding with bold investments in U.S.-based manufacturing and R&D to mitigate future tariff risks. Structural demand drivers remain powerful. Non-communicable diseases _NCDs_ account for roughly three-quarters of all global deaths, with 18 million of these occurring before age 70—most in low- and middle-income countries while population ageing accelerates _1 in 6 people will be 60_ by 2030; the 60_ cohort is projected to double to 2.1 billion by 2050_. These trends underpin persistent need for chronic-care therapies and affordable generics across emerging markets.

On the innovation and market-mix side, GLP-1 therapies continue to reshape revenue pools, while looming patent cliffs are set to open substantial opportunities for generics and biosimilars. Evaluate projects GLP-1 medicines to approach 9% of global drug sales by 2030, even as more than USD 300 billion of branded sales face loss of exclusivity by 2030supporting sustained genericization through the decade.

Trade & Policy Uncertainty: Headwinds Remain

Global trade policy has turned increasingly protectionist, with the United States and China introducing signiÎcant new tariff measures in early 2025. These moves have escalated uncertainty, with retaliatory policies adding further complexity. As a result, global trade in goods and services is projected to slow sharply to 1.8% in 2025 from 3.4% in 2024. For pharmaceutical players, especially in generics, such policy frictions may impact both export competitiveness and sourcing of intermediates. However, the sectors essential nature, coupled with global focus on healthcare security, provides a partial buffer against these shocks.

Outlook: Stability Anchored in Healthcare Demand

Looking ahead, the global economy in FY2025 stands at a delicate balance between stabilizing factors and emerging risks. Moderating inflation and a measured policy shift toward normalization are providing some relief. Yet, escalating trade tensions, currency volatility, and uneven regional growth trends highlight the fragile nature of the recovery. In this context, pharmaceuticals and generics are expected to remain a bright spot, supported by strong structural demand drivers and the sectors role as a public health enabler. For economies and businesses alike, agility, innovation, and policy alignment will be critical to navigating uncertainty and building resilience in the years ahead.

Indian Economy

FY2025 marked another year of resilience for the Indian economy, which continued to expand at one of the fastest rates among major economies despite an unsettled global backdrop. The country successfully navigated challenges such as heightened trade tensions, volatile commodity prices, and subdued global demand, thanks to the strength of domestic consumption, steady infrastructure investments, and an ongoing transformation in manufacturing and digitalisation. Prudent Îscal management, a more stable inflation trajectory, and a robust Înancial sector further supported macroeconomic fundamentals.

Growth Drivers: Domestic Strength Offsetting External Weakness

Indias real GDP is projected to have grown by 6.5% in FY2024–25, according to the National Statistical OfÎce _NSO_. Agriculture and services were the key growth pillars in the Îrst half of the year, supported by record Kharif output and favourable weather conditions that lifted rural incomes and demand.

Private consumption remained resilient throughout the year, reinforcing the strength of domestic demand. The manufacturing sector, however, felt the pinch of weaker global demand and seasonal pressures. Fiscal prudence and a strong external balance—driven by a healthy services trade surplus and rising remittances—helped reinforce economic stability and set the stage for sustained expansion.

Real GDP _on-year growth_	2019	2020	2021	2022	2023	2024	2025P	2029P
World	2.90%	-2.70%	6.60%	3.60%	3.50%	3.30%	2.80%	3.20%
India*	3.90%	-5.80%	9.70%	7.60%	9.20%	6.50%	6.50%	6.70%

Infiation Moderates, Food Prices Stay Volatile

Infiationary pressures eased in FY2025, with average headline inflation moderating to 4.6% compared to 5.4% in the prior year. The decline was aided by softer input costs, proactive supply-side measures, and transmission of earlier monetary tightening. Core inflation flexcluding food and fuel_ fell to 3.5%, while fuel prices saw a defiationary trend. Food prices, however, remained volatile, with inflation averaging 6.7% during the year. Spikes in cereals, edible oils, and protein items reflected tight supply conditions and weather-related disruptions. For the pharmaceutical industry, this moderation in non-food inflation, combined with softer energy prices, provides partial relief in terms of input and logistics costs, though food price swings can indirectly influence demand patterns in lower-income segments.

Policy Direction: Neutral Stance with Growth Support

Recognising the delicate balance between growth and inflation, the Monetary Policy Committee _MPC_ shifted its stance to neutral in October 2024. This created room for calibrated support to growth, culminating in a 25 bps cut in the repo rate to 6.25% in February 2025. Liquidity conditions improved on average during the year, though periods of deÎcit emerged toward the end due to higher currency in circulation and FX operations. The supportive monetary backdrop will be important for credit-dependent industries like pharmaceuticals, where investments in capacity, R&D, and exports are on the rise.

External Sector and Currency Resilience

The Indian Rupee _INR_ exhibited relative stability compared with many emerging peers, despite global dollar strength. Sound macro fundamentals, a manageable current account deÎcit, and ample reserves helped ensure an orderly adjustment. The Reserve Bank of India _RBI_ also continued to promote wider international use of the INR in trade settlement. For pharma exporters, particularly in generics, this relative currency stability has helped preserve competitiveness in key global markets.

Market Dynamics: Resilient but Volatile

Domestic equity markets hit records high in the Îrst half of FY2025 before moderating in the second half due to concerns over global trade policies, slower GDP momentum, and FPI outflows. Bond yields softened during the year, stimulating debt issuance. Despite volatility, Indias market ecosystem demonstrated resilience, providing a supportive environment for companies in capital-intensive industries such as pharmaceuticals.

Outlook FY2026: Strong Growth Anchored in Healthcare Demand

Looking forward, Indias economy is expected to sustain strong momentum, with GDP growth projected at 6.5–6.7% in FY2025–26. Growth will be underpinned by healthy private consumption, Îscal support for infrastructure, and favourable monsoon-led rural recovery. Structural reforms such as PLI schemes, digital public infrastructure, and supply-chain efÎciencies are expected to lift productivity and competitiveness. Importantly, healthcare and pharmaceuticals remains a structural growth driver, supported by rising chronic disease prevalence, expanding insurance coverage, and Indias cost competitiveness in generics and formulations. While risks from global uncertainty, trade frictions, and inflation volatility persist, India is well-placed to remain among the worlds fastest-growing economies.

Trade Performance: Electronic, Engineering & Pharma Exports Support Stability

Indias merchandise exports edged up 0.1% YoY in FY2025 to USD 437.4 billion, recovering from the prior years contraction. The recovery was led by electronics, engineering goods, drugs and pharmaceuticals, and textiles, even as petroleum and gems & jewellery faced weakness. Imports grew 6.2% YoY to USD 720.2 billion, driven by higher inflows of gold, electronics, and petroleum products. Notably, pharma exports continued to act as a stabilising force, with Indian formulations, bulk drugs, and generics gaining global traction amid rising demand for affordable healthcare solutions. This further reinforces Indias role as the pharmacy of the world.

Relative Contribution of Major Sectors to Export Growth _2024-25 over 2023-24_

Industry Overview

Global Pharmaceutical Industry 2024: A Year of Policy Shifts, Innovation, and Strategic Investments RedeÎning Pharmas Future

The global pharmaceutical market was valued at USD 1.67 trillion in 2024 and is projected to rise to USD 1.77 trillion in 2025, reaching approximately USD 3.03 trillion by 2034, at a CAGR of 6.15%. Growth is being propelled by increasing demand for vaccines, advanced therapies, and personalized medicines, alongside the rising global burden of chronic diseases. The sector is undergoing transformative changes, fuelled by multiple drivers such as an aging population, expanding prevalence of age-related conditions, and enhanced government focus on healthcare. Investments in R&D, wider adoption of biologics and biosimilars, and higher healthcare spending continue to accelerate growth. Additionally, pharmaceutical companies are increasingly adopting AI, digital health, and advanced manufacturing technologies to boost drug discovery and production efÎciency. The growing push toward personalized therapies and digital healthcare ecosystems, coupled with stronger collaborations between governments, healthcare providers, and pharma players, is reshaping the industry landscape.

United States of America

North America dominated the global market by capturing the largest share of 42% in 2024. This is mainly due to the increased prevalence of chronic disease, high demand for personalized medicine, an aging population, and the adoption of automation in drug discovery. North America has a well-established pharmaceutical manufacturing base. Increased investment in R&D and a signiÎcant rise in clinical trials bolster the growth of the market in the region. The U.S. is leading the market in North America. This is mainly due to the rising government spending on pharmaceutical R&D. There is a high demand for mRNA vaccines, biologics, and biosimilars. With the growing prevalence of chronic diseases, the demand for cell and gene therapies is rising, contributing to market expansion. In addition, rising development of novel drugs support market growth.

Asia PaciÎc

The Asia PaciÎc region emerged as the fastest-growing market, supported by the rapid expansion of pharma and biopharma sectors, rising healthcare expenditure, and strong government backing for novel drug development. Increasing incidence of diabetes, cardiovascular diseases, and cancer is driving demand for effective therapies, while countries in the region are signiÎcantly scaling up production of biologics.

India continues to reinforce its role as the Pharmacy of the World, contributing around 20% of the global supply of generics. In April 2025, the Indian pharmaceutical sector grew by 7.8% YoY, fuelled by rising exports, policy-driven support, and investments in innovation. Government initiatives such as the National Pharmaceutical Policy aim to enhance affordability, quality, and reduce dependence on Chinese APIs, positioning India as a strategic hub for cost-effective global healthcare solutions.

Europe Pharmaceutical Market & Trends

Europe remains a key contributor to global pharmaceutical growth, backed by strong healthcare infrastructure, high R&D investment, and presence of leading pharmaceutical giants. Germany leads the regional market, underpinned by its strong industrial base and focus on technological advancement. Following a contraction of 0.4% in 2024, the pharmaceutical output in the EU and UK is expected to rebound by 1.9% in 2025 and 0.4% in 2026, signalling gradual recovery. Rising incidence of chronic conditions like cancer and diabetes is further supporting market expansion.

Key Trends in the Pharmaceutical Market

Rising Burden of Chronic Diseases: Growing prevalence of cancer, cardiovascular disorders, obesity, and diabetes is amplifying demand for innovative and targeted therapies.

Aging Population: Increasing longevity is fuelling demand for advanced, age-related healthcare solutions.

Biologics, Biosimilars & Personalized Medicine: Rapid innovation in biologics, gene therapies, and biosimilars is transforming treatment paradigms and patient outcomes.

Healthcare Spending & Policy Support: Governments are expanding healthcare budgets and encouraging local API manufacturing to strengthen supply chains.

Drug Pricing & Reimbursement: Policies on pricing, access, and reimbursement remain central to market expansion and patient accessibility.

Outlook

The global pharmaceutical industry stands at the cusp of accelerated transformation. Sustained demand for generics and biosimilars, breakthroughs in biologics and gene therapies, and the digitalization of healthcare are expected to redeÎne the sector in the coming decade. While pricing pressures and regulatory complexities remain challenges, the industrys alignment with global healthcare needs ranging from chronic disease management to pandemic preparedness will drive robust long-term growth.

For India, with its strong generic manufacturing base and government-backed initiatives, the outlook remains particularly promising. The country is poised not only to meet domestic demand but also to strengthen its role as a reliable global partner in affordable and quality healthcare delivery.

Source: Precedence Research, IQVIA

Indian Pharmaceutical Industry

The Indian pharmaceutical market is estimated at USD 66.66 billion in 2025 and is projected to reach USD 88.86 billion by 2030, registering a CAGR of 5.92%. Growth is underpinned by a balanced momentum from domestic consumption and international exports, supported by rising incidence of chronic diseases, policy-driven incentives, and sustained global demand. The Governments Production Linked Incentive _PLI_ schemes, broader health-insurance penetration, and rapid digital adoption are driving higher volumes, while also shifting the competitive mix towards value-added specialty therapies. While e-pharmacy channels are expanding at the fastest pace, Indias vast retail network of nearly 850,000 pharmacies continues to form the backbone of distribution. Simultaneously, the ongoing transition from acute to chronic therapies and the increasing role of contract manufacturing for global innovators are attracting signiÎcant investments in sterile injectables, advanced formulations, and large-scale API facilities.

PLI Schemes Driving API Self-Reliance and Affordable Access

Government support through the Production Linked Incentive _PLI_ scheme has emerged as a cornerstone for strengthening Indias pharmaceutical backbone. For FY2025-26, PLI allocations increased to INR 2,444.93 crore, covering 11 critical bulk drug lines and attracting cumulative investment commitments exceeding INR 1.46 lakh crore. Key manufacturing hubs in Gujarat, Maharashtra, and Telangana are channelling these funds into fermenters and continuous-processing facilities—an effort aimed at reducing dependence on Chinese APIs, which still account for nearly 80% of import volumes. Early projects have already improved lead times in macrolide antibiotics and corticosteroid intermediates, thereby enhancing supply chain resilience.

As greenÎeld capacities move toward validation in 2027–2028, domestic API production is expected to narrow cost differentials and strengthen pricing power for Înished formulations in the Indian market. A successful import-substitution cycle would also mitigate foreign-exchange exposure on raw material imports.

Beyond APIs, the government has set an ambitious target for the medical devices sector—expanding from its current valuation of USD 11 billion to USD 50 billion by 2030. Simultaneously, affordability initiatives like the Pradhan Mantri Bhartiya Janaushadhi Pariyojana _PMBJP_ are gaining momentum. The scheme achieved sales of medicines worth 1,767.18 crore _MRP_ in FY2024-25 fitill 28 February 2025_, marking a 33% increase over 1,327 crore in the corresponding period of FY2023-24, underscoring its role in improving access to essential medicines.

Rising Demand for Chronic-Care Therapies Amid Ageing Demographics

Chronic therapies continued to outperform overall market growth, expanding 9.9% in January 2025 versus the broader markets 8.4%. Cardiac _10.7%_ and anti-diabetic portfolios led this momentum, reflecting Indias demographic shift as the 60_ age group is set to double to 19% of the population by 2050. This structural trend is reshaping treatment portfolios, with companies introducing Îxed-dose combinations, once-weekly injectables, and digital patient-support apps to build long-term product stickiness. The strongest traction is visible in metro clinics across South and West India, where earlier diagnosis drives higher reÎll adherence for lipid-lowering and anti-hypertensive therapies.

Expanding CDMO Outsourcing to India by Global Innovators

Indias contract development and manufacturing _CDMO_ industry, currently valued at USD 15.63 billion, is projected to nearly triple by 2029. The creation of the Innovative Pharmaceutical Services Organization _IPSO_ in March 2025 has set uniform standards for quality, data integrity, and digital tech transfer, enhancing conÎdence among US and EU sponsors. Hybrid models such as Shilpa Medicares development-to-commercialization platform—are accelerating molecule lifecycles. More than USD 7 billion has already been invested in global capability centres across India, spanning discovery analytics, clinical biostatistics, and regulatory services. These shifts are attracting high-value biologics, ADCs, and peptide API mandates to India, broadening capabilities and deepening local expertise.

Digital Health & E-Pharmacy Driving Wider Access

E-pharmacies, expanding at 7.3% annually, have reshaped patient access through doorstep reÎlls, fiat-fee delivery, and bundled teleconsults. A large base of chronic-care users who adopted these platforms during the pandemic continue to prefer digital convenience, supported by discounts and algorithmic prescription checks. With NABL-approved warehouses and kirana-store pick-up models, platforms are extending reach into Tier-2 and Tier-3 towns. While regulatory clarity on a nationwide e-pharmacy code is awaited, the growing digital layer is enhancing transparency and consumer choice, prompting of_ine retailers to sharpen service levels.

Market Structure By Therapeutic Category: Chronic-Care Momentum

Anti-infectives retained the largest share at 19.6% in 2024, underscoring the continuing communicable disease burden. Oncology posted the fastest growth, with a 7.1% CAGR outlook, supported by improved screening and reimbursement. Cardiovascular drugs grew 10.7% in early 2025, cementing their position as the largest chronic-care segment by value. Gastrointestinal therapies rose 10.9%, driven by proton-pump inhibitor combinations, while anti-diabetic drugs expanded 6.9%, reflecting lifestyle-linked demand.

India Pharmaceutical Market: Marketshare by TherapeuticCategory, 2024

_In %_

By Drug Type: Generics Core, OTC Ascendant

Generics remain the backbone, accounting for 69% of Indias pharma market in 2024, with branded generics commanding 87% of prescription value. Resilience is underpinned by physician familiarity and price sensitivity, even under price caps. Meanwhile, OTC drugs are projected to grow at 6.7% CAGR through 2030, supported by self-care trends, digital penetration, and direct-to-consumer marketing. Companies increasingly run twin strategies clinician-focused branded generics and brand-led OTC packs using online bundling to expand customer basket values.

By Distribution Channel: Hybrid Model Emerging

Retail pharmacies retain a dominant 75% share, though face margin pressure from Jan Aushadhi and chain consolidation. Online pharmacies, growing at 7.3% annually, are building integrated models combining teleconsultation, diagnostics, and logistics. Hospital pharmacies are expanding direct procurement of specialty biologics, while wholesalers modernize with warehouse management systems and real-time demand analytics. With regulatory clarity on e-pharmacy expected by 2026, a hybrid model blending online, doorstep delivery, and neighbourhoods chemist counselling appears inevitable.

Source: Mordor Intelligence, IBEF

Indias Global Position

India remains a global leader in affordable medicines, supplying over 50% of global vaccine demand, 40% of US generic consumption, and 25% of UK medicines. It is the worlds third-largest producer of drugs by volume and hosts the highest number of USFDA-compliant plants outside the US. India also ranks among the top 12 biotechnology destinations globally and third in Asia-PaciÎc, holding a 3–5% share of the global biotech industry.

KEY EMERGING TRENDS & GROWTH DRIVERS

The Indian pharmaceutical industry is expected to see signiÎcant growth in coming years, driven by several key factors:

Government Support and Initiatives: Indian government has signiÎcantly ramped up its support for the pharmaceutical sector

• Healthcare Spending: Public healthcare expenditure rose by 33%, from 1.4% of GDP in 2019 to 2.1% in 2023, with further increases in FY2025. The Union Budget 2025–26 allocated 1.03 lakh crore to healthcare, an 11% YoY increase.

• PLI Scheme: The Production Linked Incentive scheme continues to incentivize domestic manufacturing of APIs and medical devices. New applications were invited for 11 critical APIs, and 604 crore was disbursed in H1 FY2025.

• Digital Health Push: Under the Ayushman Bharat Digital Mission, over 78 crore health accounts have been created, and 55 crore records linked. This digitization is improving access and efÎciency.

• Support for Startups: Funds are being channelled into healthcare startups and MedTech clusters, fostering innovation and entrepreneurship.

Surge in Generic Drug Demand: India remains a global leader in generic drug production

• Supplies 40% of generics consumed in the US, 25% in the UK, and 50% of global vaccine demand.

• The generic drug market grew to USD 26.31 billion in FY2025, with a projected CAGR of 6.10% through 2030.

• Demand is driven by affordability, chronic disease prevalence, and expansion of Jan Aushadhi Kendras offering generics at up to 80% lower prices.

Global Value Chain ReconÎguration: India is gaining from the global shift in pharmaceutical sourcing

• Outsourcing in drug discovery and manufacturing is expected to rise from 58% to 61% by 2027.

• Companies are diversifying away from China, and Indias regulatory compliance has improved, with FDA violation rates dropping to 11%.

• Indian Leading CDMOs are expanding globally, enhancing Indias position as a preferred outsourcing hub.

Expansion of Healthcare Accessibility: Improved access and awareness are boosting domestic demand

• Ayushman Bharat PM-JAY now covers 55 crore individuals, with new schemes for senior citizens and rural populations.

• Over 1.75 lakh Health & Wellness Centres are operational, improving access in semi-urban and rural areas.

• Medical education is expanding, with 10,000 new MBBS seats added in FY2025.

Boost in Domestic Manufacturing: India is focusing on self-reliance in pharma production

• The PLI scheme and Public Procurement Order _PPO_ are driving local manufacturing of APIs and medical devices.

• Imports from China still dominate

_74% of bulk drugs_, but investments by Indian Leading Pharmaceuticals companies into their Capacity expansion and domestics operations are strengthening capabilities.

• MedTech clusters and the Government e-Marketplace are supporting indigenous innovation.

Competitive Manufacturing Costs: Indias cost advantage remains a key strength

• Manufacturing costs are 30–35% lower t han in Western markets.

• R&D costs are 87% lower, supported by a skilled workforce and over 650 USFDA-approved facilities.

• The scale and efÎciency of Indias pharma ecosystem make it globally competitive.

Technological Progress: Digital transformation is reshaping the industry

• AI and machine learning are being used in drug discovery, clinical trials, and supply chain optimization.

• Few Indian Companies are piloting predictive toxicology and trial selection models.

• Smart sensors, advanced analytics, and automation are improving quality control and operational efÎciency.

Export Expansion: Continue to be a major growth engine

• Pharma exports reached USD 30.5 billion in FY2025, up 9.3% YoY.

• India is targeting USD 65 billion by 2030 and USD 350 billion by 2047.

• Growth is driven by complex generics _injectables, inhalers_, biosimilars, and branded products, with strong demand from regulated markets.

Indias Growing Demand for Affordable Generic Medicines

As global healthcare systems continue to prioritize accessibility and cost efÎciency, Indias role as a leading exporter of generic medicines remains a cornerstone in the worldwide transformation of healthcare. With strong capabilities in research and development, a skilled workforce, cost-efÎcient manufacturing, and a well-established regulatory framework, India has emerged as one of the most reliable suppliers of high-quality generics at competitive prices.

The Indian generic drugs market reached USD 26.31 billion in FY2025, up from USD 24.91 billion in FY2024 expected to grow to USD 35.40 billion by 2030, at a CAGR of 6.10% from 2025 to 2030, as per Mordor Intelligence. Indias pharmaceutical exports hit a record USD 30.47 billion in FY2025, marking a 9.4% YoY growth. This growth momentum is supported by rising global demand for affordable medicines, strong domestic production capabilities, and ongoing government initiatives to strengthen the pharmaceutical ecosystem. Rising demand for affordable healthcare is shaping the growth of Indias generics market. With rising healthcare costs and limited affordable access to branded medications, patients and increasing number of healthcare providers are turning to generic drugs as a cost-effective alternative. Generic medications offer comparable efÎcacy, safety, and quality to branded equivalents at a fraction of the cost, making them an attractive option for individuals seeking affordable treatment options. According to the National Health ProÎle of India, healthcare expenditure has been increasing steadily, with a signiÎcant focus on reducing out-of-pocket expenses for medical care. Using generic medicines can save patients from 60% to 90% on their medication costs. This affordability makes it easier for people to access essential treatments for Chronic conditions like Diabetes, Hypertension, Cardiovascular & Neurovascular diseases, medicines including antihypertensives, statins, antiplatelet drugs, and anticoagulants remains robust, as these therapies form the backbone of long-term disease management. Initiatives such as the National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke _NPCDCS_ and Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana _AB-PMJAY_ continue to expand access to cost-effective treatments, reinforcing the role of generics in ensuring healthcare equity across India.

WHO estimates that approximately 77 million individuals above the age of 18 in India suffers from type 2 diabetes, and 25 million are at a greater risk of developing diabetes. The rising cases of such diseases, coupled with changing lifestyles and the expansion of the aging population, are propelling the requirement for long-term medications that are cost-effective and are preferred by both healthcare providers and patients, supporting the India generic drugs market growth.

Indias leadership in generic cardiovascular drugs is further supported by a strong base of domestic pharmaceutical companies, along with favourable regulatory and policy support for indigenous manufacturing. Together, these factors strengthen Indias position as a critical supplier of essential medicines for both domestic and global markets. However, the sector continues to face challenges such as patent litigations, intellectual property issues, and global pricing pressures. Addressing these structural hurdles through coordinated efforts among regulators, industry participants, and healthcare providers will be crucial in sustaining growth and ensuring uninterrupted access to affordable generics for patients worldwide.

Pradhan Mantri Jan Aushadhi Pariyojana: Progress and Impact as of March 2025

The Government of India launched the Jan Aushadhi Scheme in November 2008 under the Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers, with the objective of making quality medicines available to citizens at affordable prices. In 2015, the program was revamped and rebranded as the Pradhan Mantri Jan Aushadhi Yojana _PMJAY_ to enhance its reach and impact. A year later, in 2016, it was further strengthened and renamed as the Pradhan Mantri Bhartiya Janaushadhi Pariyojana _PMBJP_, expanding its vision and mission.

At the core of this initiative is the establishment of Pradhan Mantri Bhartiya Janaushadhi Kendras _PMBJKs_ across the country. These centres provide high-quality generic medicines to the public at prices signiÎcantly lower than branded alternatives, thereby ensuring wider accessibility and affordability, especially for economically weaker sections of society.

Objective

The Pradhan Mantri Bhartiya Janaushadhi Pariyojana _PMBJP_ was launched with the mission of ensuring availability of quality generic medicines at affordable prices for all, particularly for economically weaker sections. The scheme emphasizes that l ow-cost medicines do not compromise on quality, thereby promoting equitable healthcare access across the country.

Key Activities

Awareness Creation: Educating the public on the beneÎts of generic medicines and dispelling misconceptions that higher prices equate to better quality.

Promotion of Generic Prescriptions: Encouraging healthcare professionals, especially in government hospitals, to prescribe generic alternatives for cost-effective treatment.

Enhancing Accessibility: Expanding the network of Pradhan Mantri Bhartiya Janaushadhi Kendras _PMBJKs_ to provide a wide range of essential medicines across therapeutic categories.

Key Features of PMBJP

• Prices of the Jan Aushadhi medicines are 50%-80% less than that of branded medicines prices available in the open market.

• Medicines are procured only from World Health Organization – Good Manufacturing Practices _WHO-GMP_ certiÎed manufacturers for ensuring the quality of the products.

• Each batch of drug is tested at laboratories accredited by National Accreditation Board for Testing and Calibration Laboratories _NABL_ for ensuring best quality.

• The incentive up to 20,000/- per month is given @ 20% of monthly purchases made and subject to the stocking mandate.

• A one-time incentive of 2.00 lakh is provided to PMBJP Kendras opened in North-Eastern States, Himalayan areas, Island territories and backward areas mentioned as aspirational district by NITI Aayog or opened by women entrepreneur, Ex-serviceman Divyang, SC & ST.

Key Highlights _as of 28 February 2025_:

Network Expansion: 15,057 Jan Aushadhi Kendras _JAKs_ operational across India.

Product Basket: 2,047 medicines and 300 surgical/ medical consumables across all major therapeutic groups including cardiovascular, oncology, diabetes, anti-infectives, allergy, gastrointestinal, and nutraceuticals.

Affordable Access: Medicines offered at 50%–80% lower rates than branded medicines.

Daily Reach: Around 10–12 lakh people visit JAKs daily to access affordable medicines.

Womens Health: Over 74.5 crore Jan Aushadhi Suvidha sanitary napkins were sold at 1 per pad.

Economic Impact:

• Medicines worth 6,975 crore _MRP value_ sold in the last 10 years.

• Citizens saved approximately 30,000 crore compared to branded alternatives.

Rural Outreach:

• 724 Kendras established through Primary Agricultural Credit Societies _PACS_ and cooperatives. • Aimed at improving medicine access in rural and remote areas.

Awareness & Outreach Initiatives

To spread awareness about the scheme, the

Pharmaceuticals and Medical Devices Bureau of India _PMBI_, the implementing agency, undertakes: Mass Media Campaigns: Advertisements via print, radio, TV, mobile apps, cinema, hoardings, buses, auto-wrapping, and CSC digital screens.

Digital Engagement: Active outreach on social media platforms such as Facebook, X, Instagram, and YouTube.

Jan Aushadhi Diwas: Celebrated annually on 7th March to highlight the schemes achievements and beneÎts.

Implementation Model

• PMBJP follows a franchise-like model for opening Jan Aushadhi Kendras.

• Eligibility: Applications invited from individuals, NGOs, trusts, societies, private Îrms, and companies.

• Application Process: Online through www. janaushadhi.gov.in.

• Location Criteria: Ordinarily, a minimum distance of 1 km between two Kendras is maintained.

• Decentralized Expansion: No state or union territory-wise target; Kendras are encouraged at block and district levels for maximum outreach.

Financial performance

In the Îscal year 2025, Zota Health Care Limited has showcased a strong Înancial performance with a notable increase in revenue and gross proÎt. Our consolidated revenue from operations recorded an impressive growth of 62% Year on Year, reaching 29,298 lakhs, up from 18,048 lakhs in FY24. Davaindia continues to be the largest contributor to our revenue mix, accounting for 64% of total revenue, which stood at 18,621 lakhs, registering a 80% YoY growth reflecting the expansion of our retail footprint and growing consumer adoption of affordable generic medicines. Our Domestic Sales stood at 6,342 lakhs, growing by 11% YoY, with a revenue share of 22%. The Export Business also showed a positive trend, growing by 59%, reaching 3,190 lakhs, contributing 11% to the total revenue. Our newly acquired Everyday Herbal Group contributed 1,144 lakhs to the revenue this year.

Gross proÎt stood at 15,567.1 lakhs in FY25, representing an 85.7% increase over 8,378.8 lakhs in FY24. The gross margin improved to 53.1% _vs. 46.4% in FY24_, underpinned by scale efÎciencies and higher contribution from the Davaindia business model, which commands better margins.

On the cost front, employee expenses increased to 8,606.6 lakhs in FY25 _vs. 3,045.1 lakhs in FY24_, reflecting network expansion and higher investments in talent to support retail and operational scale-up. Other expenses rose to 7,533.8 lakhs _vs. 4,578.4 lakhs in FY24_, largely due to marketing, distribution, and store-related costs associated with the aggressive Davaindia roll-out. Consequently, total operational expenses increased to 16,140.4 lakhs in FY25, more than double the 7,623.4 lakhs in FY24.

As a result, the company reported an operating loss of 573.3 lakhs in FY25, compared to an operating proÎt of 755.4 lakhs in FY24. Similarly, EBITDA remained negative at 366.5 lakhs, against a positive 871.0 lakhs in FY24, reflecting the upfront costs of scaling operations.

After accounting for depreciation of 4,319.6 lakhs _vs. 2,008.5 lakhs in FY24_ and Înance costs of 1,078.3 lakhs _vs. 478.8 lakhs in FY24_, EBT stood at a loss of 5,764.5 lakhs in FY25 compared to a loss of 1,616.3 lakhs in FY24. Net loss for FY25 widened to 5,855.0 lakhs, as against a net loss of 1,434.8 lakhs in FY24.

From a strategic perspective, the company anticipates a positive shift in its Înancial metrics as the Davaindia stores continue to grow and occupy a larger portion of the business with 3_ years of matured stores. This expansion is expected to lead to a reduction in working capital days and an improvement in return ratios due to negligible Receivables Days. With the planned increase in the number of stores, Zota Health Care Limited aims to establish a more extensive market presence and attract a larger customer base, supported by the stores maturity cycle. The company projects an upward trajectory in Gross Merchandise Value _GMV_, indicating a vision of sustainable growth and a broader market reach. Zota Health Care Limited is focused on leveraging its Înancial strengths and addressing areas for improvement, with a commitment to creating long-term value for its stakeholders and maintaining its strong presence in the healthcare industry.

FINANCIAL RATIOS

Particulars	FY25	FY24	Variation %
Current Ratio	3.08	2.56	20.01
Debt -Equity Ratio 1	0.00	0.12	-99.47
Debt Service Coverage Ratio 2	12.16	18.51	-34.30
Return on Equity Ratio	0.03	0.03	-2.17
Inventory Turnover Ratio	5.17	4.39	17.67
Trade Receivables Turnover Ratio	2.91	2.84	2.47
Trade Payables Turnover Ratio	4.54	3.91	16.17
Net Capital Turnover Ratio	2.05	2.12	-3.36
Net Prot Ratio 3	0.03	0.02	65.08
Return on Capital Employed	0.04	0.04	-3.79
Return on Investment	0.03	0.03	-2.17

Note: Financial Ratios have been calculated based on the Standalone numbers

1. During the year, the debt has been reduced as compared to the last Înancial year and Equity and other equity have been increased on account of fresh fund raise through preferential issues.

2. During the year, net sales of the Company has been increased on account of higher sales numbers from the Davaindia vertical. Consequently, net operating income has been surged. Further, the debt service has been increased as compared to the last Înancial year.

3. During the year, net sales of the Company has been increased on account of higher sales numbers from the Davaindia vertical. Consequently, net proÎt during the year has been surged.

Company Overview

Founded in 2000 with a strong commitment to democratizing healthcare, Zota Health Care Limited _ZHCL_ began its mission in the bustling city of Surat, Gujarat. We are dedicated to providing affordable healthcare solutions to the masses, and we take pride in improving access to high-quality, cost-effective medications for chronic diseases such as diabetes, cardiovascular ailments, and thyroid conditions. Our efforts have been crucial in advancing the Indian healthcare industry, offering signiÎcant support and impetus to the sector. Over time, Zota has garnered acclaim for our exceptional capability to supply premium generic pharmaceuticals at prices that ensure widespread accessibility. Our business comprises of three specialized segments: Domestic, Exports, and our Retail Pharmacy Chain known as Davaindia. While each segment operates autonomously, they are united by a singular vision to make healthcare accessible to everyone.

Our cutting-edge manufacturing facility located in Sachin SEZ empowers us to cater to over 30 countries in the export market. Concurrently, Davaindia, our generic retail pharmacy chain, has established a robust network with 1582 outlets with the blend of 852 FOFO & 730 COCO outlets across 23 states & 2 Union Territories, exemplifying our commitment to affordable medicine and catering to the varied healthcare needs of Indias multifaceted populace. At the core of our operations lies the fundamental ethos of prioritizing our customers. This core value motivates us to advocate for affordable healthcare for all. As we forge ahead, our zeal to effectuate a tangible difference in global healthcare remains strong and resolute. It gives us a sense of fulÎlment to have made a signiÎcant difference in the lives of numerous individuals through our commitment. With our eyes set on the future, we continue to strive for meaningful transformations in the healthcare domain and leaving an enduring mark on lives across the globe.

Business verticals

Retail pharmacy chain _Davaindia_

Within the sphere of our Retail Pharmacy Chain division, Zota Health Care Limited proudly operates under the Davaindia brand, which has emerged as the most expansive generic pharmacy chain in Indias private sector. Davaindias core mission is to offer high quality generic medicines and provides 30% to 90% savings to the consumers as compared to branded equivalents, making healthcare more affordable for consumers. Davaindia is committed to a range of private-label products that include pharmaceuticals, nutraceutical, over the counter _OTC_ items, and ayurvedic treatments, with a special focus on chronic disease management. Since its inception, Davaindia has rapidly grown from four modest stores in 2017, to become the leading private-sector generic pharmacy network, boasting 1582 active stores as of March 31, 2025. The business model of Davaindia is characterized by an innovative and efÎcient asset-light franchise approach for the majority of its stores. Our growth strategy encompasses both company-owned, company-operated _COCO_ and franchisee-owned, franchisee-operated _FOFO_ store formats. These larger, walk-in COCO stores are managed by our fully owned subsidiary, Davaindia Health Mart Limited, and are focused on selling Davaindia products, with 100% being private-label items.

Davaindia stands at the forefront of the generic retail pharmacy sector, setting a benchmark for accessibility and affordability in medication. We are conÎdent that Davaindia will continue to be a transformative force in meeting the healthcare needs of Indias vast population. Our dedication to delivering cost-effective healthcare solutions is unwavering, with the well-being of our customers at the heart of everything we do.

Domestic Operations

The Domestic Marketing division of Zota Health Care Limited is a dynamic force driving our growth, serving as the primary contributor to our success. This vertical is dedicated to the direct distribution of a comprehensive range of pharmaceutical products, including generic drugs, over the counter _OTC_ items, and a variety of other pharmaceutical essentials. Our extensive distribution network is the backbone of this operation, spreading across the length and breadth of India. Our domestic strategy is centred on procuring Înished dosage forms _FDFs_ from reputable domestic formulation manufacturers and marketing these products under our own array of trusted brands. We place immense emphasis on product quality, which is why we choose to collaborate exclusively with manufacturing partners accredited by the World Health Organization _WHO_. Our portfolio is vast and varied, encompassing over 4,000 products across multiple categories such as generics, OTCs, allopathic, and ayurvedic medicines, addressing a broad range of healthcare needs. Our business model is meticulously crafted to facilitate direct distribution through a robust network of over 1,050 distributors, each of whom is carefully selected to cover speciÎc districts across India. This ensures dedicated coverage and reduces competitive conflicts by granting exclusive distribution rights within their territories. Our distributors are the linchpins of our marketing efforts. They independently undertake ethical marketing, sales, and promotional activities, bypassing the need for additional intermediaries like stockists, super-stockists, carrying and forwarding agents, and wholesalers. By directly incentivizing our distributors, we empower them to optimize sales effectiveness and efÎciency.

This strategic distribution model not only reÎnes our operational processes but also guarantees a more streamlined and impactful delivery of our products to consumers. Our approach is designed to ensure that our high-quality pharmaceuticals are accessible to customers nationwide, reinforcing our commitment to improving healthcare access and affordability.

Exports

Zota Health Care Limiteds foray into the international arena began in 2010 with the establishment of our state-of-the-art formulations manufacturing facility within the Sachin Special Economic Zone _SEZ_. This strategic move has propelled our presence in the global market, securing product approvals in over 30 countries, with an emphasis on semi-regulated and regulated markets throughout Africa, Asia, the Commonwealth of Independent States _CIS_, and Latin America. Our Sachin SEZ facility is the cradle of innovation and production for 250_ formulations that cater to both direct export demands and contract manufacturing services. The past half-decade has witnessed our commitment and substantial investments in product registration, culminating in a series of successful approvals and a signiÎcant expansion of our export footprint. Our current export portfolio is impressive, with 325 dossiers approved across various international territories, and an additional 261 dossiers in the pipeline awaiting approval. The upward trajectory of this business vertical is a testament to our proactive strategies, which include expediting the clearance of product approval backlogs, transitioning towards direct exports in lieu of merchant exports, and the strategic engagement of exclusive distributors for our international markets. These concerted efforts have not only enhanced our global reach but also reinforced Zota Health Care Limiteds reputation as a trusted name in the pharmaceutical export sector. Our commitment to excellence and strategic market penetration continues to drive our success, positioning us as a key player in the international healthcare landscape.

Everyday Herbal

In May 2024, we acquired a 56% stake in Everyday Herbal Group, which is licensed by the Khadi and Village Industries Commission. This acquisition is a strategic step towards backward integration and aims to strengthen our OTC & Cosmetic product portfolio. The products under this brand category carry the prestigious Khadi mark, which is added edge to the brands trust, authenticity, and credibility in the eyes of consumers.

Risks and Concerns

Navigating the complexities of the pharmaceutical and healthcare industry requires operating within a highly regulated environment. Zota Health Care Limited remains fully compliant with the extensive regulations mandated by governing authorities in India and our international markets. However, certain risks and challenges could materially influence our operations and performance:

Regulatory Environment

Any changes in the regulatory framework, either domestically or in export markets, could signiÎcantly affect our business operations and growth prospects.

Industry Conduct

Unethical practices by some players in the sector may adversely impact the reputation and credibility of emerging companies, including ours.

Working Capital Management

The business is inherently working capital intensive. InefÎciencies in managing this area could strain our Înancial position and operational effectiveness.

Brand Integrity

The success of our retail pharmacy chain is closely tied to the trust and credibility of our brand. Any lapse in ethical practices or customer service could erode brand value and long-term viability.

Foreign Exchange Risk

Operations in international markets expose us to fluctuations in currency exchange rates. Without effective hedging strategies, such volatility may lead to Înancial setbacks.

Intellectual Property

Safeguarding intellectual property rights is essential to protect our formulations and brand identity. Infringements could undermine our competitive edge and market positioning.

Technological Change

The healthcare sector is highly sensitive to technological advancements and innovations. Our ability to adapt and integrate new technologies is crucial to sustaining growth and market relevance.

Supply Chain Dependence

Heavy reliance on key suppliers for raw materials exposes us to risks of supply chain disruptions. A diversiÎed supplier base is necessary to mitigate such risks.

Global Health Crises

Events such as pandemics can signiÎcantly disrupt both supply chains and demand patterns, requiring strong contingency planning and business continuity strategies.

Compliance Costs

Expansion into new geographies may increase regulatory compliance costs, which, if not managed efÎciently, could impact proÎtability. By proactively identifying, monitoring, and addressing these risks, Zota Health Care Limited remains committed to strengthening its resilience and sustaining growth in an evolving healthcare and pharmaceutical landscape.

Internal control and adequacy

Zota Health Care Limited has instituted a robust internal control framework designed to match the scale and complexity of its business operations. This framework provides reasonable assurance on safeguarding assets, preventing unauthorized use or disposition, and ensuring that all transactions are duly authorized, accurately recorded, and appropriately reported. Collectively, these controls support disciplined business conduct while ensuring adherence to established policies and statutory requirements.

The Audit Committee, in collaboration with the management team, periodically reviews and evaluates the effectiveness of these internal controls. Wherever gaps or opportunities for improvement are identiÎed, corrective actions are promptly implemented to further strengthen the system.

Key functions of our internal control environment include:

• Dynamic Framework: Internal control processes are regularly updated to reflect evolving business requirements, regulatory changes, and risk scenarios, ensuring continued relevance and effectiveness

• Independent Internal Audit: The internal audit function independently assesses the adequacy of controls and provides valuable insights to both management and the Audit Committee.

• Capability Building: Ongoing training and development programs enhance employee awareness and competence in internal control procedures and risk management practices.

• Technology Integration: Deployment of advanced digital systems and monitoring tools supports real-time oversight, efÎciency, and risk mitigation across operations.

• Transparency & Accountability: Open communication channels with stakeholders including employees, suppliers, and customers foster trust and reinforce accountability in every aspect of our business.

Through continuous reÎnement of our internal control systems, Zota Health Care Limited remains committed to upholding the integrity of its Înancial reporting, operational excellence, and full compliance with applicable laws and regulations, thereby ensuring sustainable growth and stakeholder conÎdence.

Human Resources Development & Industrial Relations

At Zota Health Care Limited, we Îrmly believe that our people are the cornerstone of our progress and one of our most valuable assets. The growth of our company is deeply connected with the growth, aspirations, and well-being of our employees. Recognizing this, we have consistently invested in building a strong, skilled, and motivated workforce while creating a workplace culture that attracts, nurtures, and retains the best talent in the industry.

During FY25, we continued to strengthen our human capital through sustained focus on capability building, performance recognition, and employee engagement. This has enabled us to foster a positive, collaborative, and inclusive work environment, underpinned by trust and mutual respect across all levels of the organization. As on March 31, 2025, our workforce stood at 3,307 employees, with 520 members in ZOTA and 2,787 members in Davaindia Health Mart _DIHML_.

Key initiatives during the year included:

• Training & Development: We rolled out comprehensive learning programs aimed at upskilling our employees and preparing them to meet the evolving demands of the healthcare sector.

• Performance Management : Our structured performance appraisal system ensures objective evaluation and recognition of individual contributions, helping to drive motivation and career growth.

• Employee Well-being: We continued to prioritize the overall well-being of our workforce by offering competitive compensation, health and insurance beneÎts, and initiatives that support work-life balance.

• Open Culture: An open-door communication policy encouraged employees to share ideas and feedback, promoting transparency, engagement, and trust.

• Diversity & Inclusion: We actively promoted a diverse and inclusive workforce, recognizing that varied perspectives are essential to innovation, creativity, and long-term success.

By consistently investing in our people, Zota Health Care Limited remains committed to building a highly skilled, motivated, and future-ready workforce. Our focus on employee development and positive industrial relations will continue to play a pivotal role in driving sustainable growth and delivering long-term value to all stakeholders.

Cautionary Statement

The Management Discussion and Analysis section of this report contains statements about the Companys objectives, projections, estimates, expectations, and outlook for the future. These may be considered forward-looking statements and must be read with due caution. Actual performance and results may differ materially from those expressed or implied, owing to a variety of risks and uncertainties.

A multitude of critical elements has the capacity to influence our business operations substantially. These elements encompass the economic and political conditions in India and other nations where we conduct business, fluctuations in interest rates, alterations in governmental regulations and policies, modiÎcations in taxation laws, and other relevant factors. It is important to underscore that our company does not assume any obligation to revise or publicly update any forward-looking statements in response to new information, future events, or otherwise, subsequent to the date of this report or to reflect the occurrence of unanticipated events.