Zydus Lifesciences Ltd Management Discussions

Global Economy

The global economy experienced growth rate of 2.7% in 2024 similar to the growth recorded in the previous year. In fact, economic conditions have become favorable compared to the previous year, following several years marked by overlapping negative shocks. Inflation has moderated without causing a substantial slowdown in key economies, and monetary policy has begun to ease. These developments are expected to lead to a broad-based global expansion, as trade and investment continue to strengthen.

Advanced economies expanded by an estimated 1.7% in 2024. The US maintained steady growth and the Euro area experienced modest pick-up. However, Japan witnessed sharp slowdown during the year. Looking ahead, advanced economies are expected to register similar growth over next couple of years, unless there is any major shift in their economic policies and geo-political conditions. Emerging Markets and Developing Economies (EMDEs) grew by an estimated 4.1% in 2024. The growth slowed down in China and South Asia during the year. However, EMDEs are likely to maintain similar growth momentum going forward, as deceleration in China is expected to be offset by strengthening in other EMDEs.

The table below shows the global growth reported for the year 2023, estimated growth numbers for the year 2024 and forecast for the year 2025:

	2023 Act.	2024 Est.	2025 Forecast
World	2.7	2.7	2.7
Advanced Economies	1.7	1.7	1.7
US	2.9	2.8	2.3
Euro Area	0.4	0.7	1.0
Japan	1.5	0.0	1.2
EMDEs	4.2	4.1	4.1

Global headline inflation continued its downward trend during the year. Easing energy and food prices, recovering supply chains, and the delayed effects of tight monetary policy contributed to this moderation. Looking ahead, global headline inflation is projected to decline to 2.7 percent in 2026, broadly aligning with target levels in many advanced economies and EMDEs.

Global financial conditions have slightly eased, since the mid 2024, primarily due to the onset of monetary easing in the US and generally strong risk appetite. Policy rates in advanced economies are expected to decline further in 2025. For much of 2024, improving investor sentiment led to capital inflows and better financial conditions in EMDEs

(Source: Global Economic Prospects, January, 2025).

In the post pandemic era, India has emerged as one of the most resilient economies among the worlds major economies. During FY2025, the Indian economy is estimated to have grown at 6.5% despite several external headwinds. The growth is significant considering that most large economies of the world struggled to maintain the momentum. The growth during the fiscal 2025 was driven by robust agricultural and service sector performance on the supply side and a steady increase in consumption and core merchandise and services exports on the demand side. The International Monetary Fund, in its Article IV report published in February 2025, has stated that Indias prudent macroeconomic policies and reform-driven approach have positioned it as the fastest-growing major economy.

Overall, inflation averaged 4.7% during April 24- February 25, down from 5.4% during the same period last fiscal as prices of key food items ease. Food inflation saw a sharp decline, driven by winter season correction in vegetable prices, continued easing of pulse prices and various administrative measures of the government. Going forward, inflation outlook remains benign as estimates of agricultural production suggest a positive outlook for food inflation.

The outlook for employment is bright. As per the Periodic Labour Force Survey (PLFS) quarterly bulletin, the unemployment rate declined from 6.5% in the Q3 (October- December) of FY 2024 to 6.4% one year later in the Q3 of FY 2025. This is accompanied by improvements in the labour force participation rate and higher worker-to-population ratio, reflecting a broader strengthening indicators in urban areas. Various indices and surveys reveal positive sentiments towards hiring.

Global trade continues to be affected by uncertainty in the policy environment. Tariff-related developments in multiple countries have heightened trade-related risks, affecting investment and trade flows globally. exports have recorded softer growth in FY2025. However, a robust services trade surplus continues to offset the impact of lower growth in merchandise exports. Within the capital account, gross FDI inflows were higher on a YoY basis. However, net FDI is significantly lower in FY2025 due to a rise in repatriation and outbound FDI. Despite the sell-off by FPIs and heightened global market turbulence, the rupee continues to be amongst the least volatile currencies as compared to its peers.

Geopolitical tensions, trade policy uncertainties, volatility in international commodity prices and financial market uncertainties pose considerable risks to the economic growth outlook, globally and locally. One offsetting positive is the outlook for commodity prices. Domestic private sector capital formation, focused on Indias solid fundamentals and economic prospects, will be an important driver of economic growth in FY2026. Supportive fiscal measures, accommodative monetary policy, and the Union Budgets focus on longer-term development drivers and reform will bolster domestic economic resilience amidst significant global uncertainties (Source: Monthly Economic Reports,

Department of Economic Affairs).

Global Pharmaceutical Industry

Global pharmaceutical industry grew by 9% in 2024 and total market is about US$ 1.75 trillion now. Going forward, global medicine spending is expected to grow in mid to high single digit and reach approximately US$ 2.4 trillion by 2029. Global health systems have demonstrated remarkable resilience in the face of the pandemic, global inflation, and regional conflicts, and have moved forward to adopt novel therapies and increased usage. Overall, global use and spending on medicines is exceeding pre-pandemic growth rates and is expected to continue significantly above those trends through 2029.

Global growth over the next five years will continue to be driven by new and existing brands in the top 10 developed countries and will be offset by reduction in spending on brands that have lost exclusivity. New brand spending in the 10 developed countries is projected to be higher than the last five years but a smaller share of spending.

In terms of volumes, consumption of medicines globally continues to expand with a 14% growth over the last five years, driven mainly by increased access to medicines. In terms of therapies, immunology, endocrinology and oncology have exceeded the global average growth over last five years, driven primarily by substantial numbers of novel products and wider access to them across geographies.

The table below depicts the current size and growth as well as estimated size and growth of different segments of the global pharma market.

	Current Size	CAGR	Est. Size	Est. CAGR
	(CY24) - US$ bn	2020-24	(CY29) - US$ bn	2024-29
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%
Low-income Countries	16	1.0%	18-22	2-5%
Total	1,750	7.7%	2,355-2,385	5-8%

Specialty medicines outlook

Share of specialty medicines in global medicines spending has gone up significantly over the last decade from 27% in 2014 to 42% in 2024. Specialty medicines are the ones that treat chronic, complex and rare diseases and are more expensive compared to other traditional medicines. Top ten largest developed countries have been the key drivers of specialty medicines over the last decade. In those countries, the share of specialty medicines spending has gone up to 51% in 2024 from 33% a decade ago. Over next five years, share of specialty medicines is likely to go up to 46% of the total spending globally as compared to 42% in 2024 with more than half of spending likely to come from major developed markets.

The chart given below shows the proportion of specialty medicines spend over the last decade and over next five years across different regions.

Global biotech outlook

Biotech has emerged as one of the key drivers of pharma spending over the last decade. Spending on biotech products, the drugs which are created through recombinant DNA technology, has grown at a robust CAGR of 14% during last decade and stood at US$ 550 billion in 2024, accounting for ~ 31% of the total global pharma market. Biotech covers a range of therapies, including traditional therapies such as insulin analogues and more complex specialty medicines and cell and gene therapies.

Over next five years, biotech spending is likely to continue its growth momentum albeit at a slower pace viz-a-viz the previous decade and reach US$820 billion by 2029.

Spending growth is likely to cool off a bit and remain in the range of 7-10% on account of the impact of key biosimilars, especially in developed markets. Continued flow of new medicines however, is likely to aid the growth going forward.

The chart below captures the current and potential size and growth of global biotech market.

Global biotech spending (US$ bn)

CY29E	820
CY24	550
CY19	293
CY14	151

Therapy-wise outlook

In terms of therapies, oncology, diabetes, immunology, cardiovascular and CNS will be the largest therapies in terms of spending in 2029. In terms of growth though, oncology and obesity will be the fastest growing therapies. Oncology is expected to grow in the range of 11-14% CAGR over next 5 years as novel treatment options continue to be launched for the treatment of cancer. Obesity segment is likely to grow at the fastest pace with a CAGR of 23-26%. GIP/GLP-1 drugs initially approved for obesity are likely to register significant growth over next 5 years (Source: IQVIA Report).

Indian Pharmaceutical Industry

Indian pharmaceutical market (IPM)

IPM is one of the fastest-growing pharmaceutical markets globally, having delivered near double-digit compounded growth over the past decade. This momentum is expected to continue, supported by several key factors such as an aging population, rising incidence of chronic illnesses, increased disposable income, higher government spending on healthcare, supportive government policies, expansion of partnerships and co-marketing agreements, deeper penetration of health insurance coverage, and growing adoption of innovation and digital technologies.

In FY2025, the IPM recorded a growth of 8%, primarily driven by price increases and the introduction of new products.

Volume growth, however, remained muted throughout the year, a trend that has persisted over the past several years. Over the last 5–6 years, price increases have played a more significant role in driving market growth, with a compound annual growth rate (CAGR) of approximately 5%, contributing around 50–55% of the total industry growth during this period.

From a therapeutic standpoint, chronic therapies outperformed acute therapies, registering a growth of 9.8% during the year. Among therapeutic areas, cardiac remained the largest segment, followed by anti-infectives.

Therapeutic area-wise break-up of IPM is as under:

Therapy Area	Sales in FY2025 (Rs. Bn)	Therapy Contribution	YoY Growth
Cardiac	30,054	12.9%	11.7%
Anti-Infectives	25,295	10.8%	5.1%
Gastro-Intestinal	25,096	10.8%	9.7%
Anti-Diabetic	20,711	8.9%	8.2%
Pain/Analgesics	18,541	7.9%	7.6%
Respiratory	18,417	7.9%	3.4%
Vitamins/Minerals/Nutrients	18,259	7.8%	8.1%
Derma	16,301	7.0%	9.5%
Neuro/CNS	14,084	6.0%	8.6%
Gynaecology	11,303	4.8%	4.0%
Others	35,203	15.1%	9.0%
Total	2,33,261	100.0%	8.0%

Leadership in global generics market

The Indian pharmaceutical industry ranks third globally in terms of production volume and plays a prominent role in the global pharmaceutical industry. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India is the largest supplier of generic drugs globally, accounting for about 20% of the global supply. It manufactures about 60000 generic drugs across 60 therapeutic categories. India supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. The country has the highest number of USFDA inspected plants outside of the US. The domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500 manufacturing units. The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights.

India is the global leader in the supply of DTP, BCG and measles vaccines. Indian vaccine manufacturers account for 60% of vaccine supplies to the UNICEF, 40 to 70% of the WHOs demand for DTP and BCG vaccines and 90% of WHOs demand for measles vaccine (Source: IQVIA Report and Department of Pharmaceuticals Annual Report 2024-25).

India Geography

Formulations Business

The Companys formulations business in India has been a cornerstone of its overall growth strategy. The business has grown consistently over the years, driven by strategic brand-building initiatives, increased market penetration, successful product launches, and a deepening presence across new therapies. The growth has been further supported by the Companys robust innovation capabilities, which continue to offer novel healthcare solutions to the patients. The business was the second largest contributor to the overall revenues during the year, accounting for 26% of the total business.

During FY2025, the Companys India formulations business sustained the growth momentum on the back of healthy volume growth and new product launches. Various strategic interventions done in the past are now yielding the results as the branded formulations business has outpaced the market since the last couple of years. Overall, the secondary sales of the Company grew by 9.5% during the year viz-a-viz 8% growth registered by the IPM. 8 of the Companys brands were ranked amongst the top 300 brands of the IPM during the year. Out of all the brands currently being marketed, 10 brands recorded sales in excess of Rs. 1,000 mn, 20 brands recorded sales between Rs. 500 to Rs. 1,000 mn while 36 brands recorded sales between Rs. 250 to Rs. 500 mn (Source: IQVIA MAT March 2025 Report). Ongoing brand building initiatives will ensure that this tally continues to improve in the coming years.

A table is given below which depicts the success of the Companys brand building initiatives over the years.

Brand Value	# Brands - MAT Mar 21	# Brands - MAT Mar 25
> Rs. 1000 mn	4	10
Rs. 500 - 1000 mn	14	20
Rs. 250 - 500 mn	28	36
Total	46	66

Cardiology, Anti-Diabetes, Respiratory, Gynaecology, Gastro-Intestinal, Dermatology and super specialty areas of Oncology and Nephrology are the focused therapy areas for the Company. During the year, the Company grew faster than the IPM in Cardiology, Respiratory, Anti-infectives and super specialty area of Oncology. Contribution of chronic portfolio in overall India formulations revenues has gone up consistently over the years and stood at 43% in FY2025 which is an improvement of 400 bps over the last 3 years (Source: IQVIA MAT March 2025 Report).

Therapeutic area-wise break up of Companys formulations sales in India as per IQVIA MAT March 2025 is as under:

The Company has strategically identified a set of flagship brands, referred to as pillar brands, which have demonstrated strong market traction and served as key growth drivers over the past year. Through targeted brand-building initiatives, the Company aims to further scale these and other emerging brands. This focused approach is expected to enhance market share for the pillar brands within their respective segments, thereby accelerating the overall growth trajectory of the business.

Over the years, the Company has developed a robust innovation portfolio comprising of New Chemical Entities (NCEs), biosimilars and vaccines, aimed at addressing the unmet healthcare needs of patients. The Company has harnessed its innovation capabilities to drive sustainable business growth.

The Companys first NCE viz. Saroglitazar Magnesium which was launched over a decade back is now approved for multiple indications viz. Diabetic Dyslipidemia, Hypertriglyceridemia, MAFLD and MASH. It is marketed under the brand names Lipaglyn^? and Bilypsa^?. Lipaglyn^? brand, since its launch, has displayed significant growth momentum. The brand became the largest brand of the Company during the year. The brand registered 38% increase in patient base during the year FY2025. Number of patients treated by the brand since its launch crossed 5 million mark during the year. Bilypsa^? brand, following its inclusion in the guidelines for MAFLD and MASH by the Indian National Association for the Study of Liver (INASL), has experienced a surge in market share and further consolidated its position in the Gastroenterology and Hepatology therapeutic areas. The Company has undertaken number of initiatives to address the challenges associated with improving access to medicines in the Gastroenterology and Hepatology space. These initiatives include continuous medical education (CME) initiatives, single theme meetings, symposia, and scientific forums for HCPs, PAN India support programs that facilitate early screening and diagnosis, various patient support programs and stakeholder engagement. Combined sales of the Companys Saroglitazar franchise (Lipaglyn^? and Bilypsa^?) registered 67% growth in secondary sales as per IQVIA, clocking revenues of Rs. 3,156 million in FY2025.

The Company continued to strengthen its position in Nephrology space with its second NCE and flagship brand, Oxemia™ which continued to make strong inroads in the CKD anaemia market.

Oxemia™ is the countrys first oral alternative to erythropoietin-stimulating agents (ESA). It offers a cost-effective alternative to injectable ESAs, with the added advantage of no cold chain requirement which is a crucial factor in a tropical country like India. The brand has provided relief to over 65,000 CKD anaemia patients since its launch.

During financial year FY2022, the Company launched Ujvira^TM brand for the treatment of breast cancer. Ujvira^TM is the worlds first biosimilar of an antibody drug conjugate Kadcyla^?. The brand was launched with an aim to make the treatment affordable to a larger pool of patients who were unable to afford the cost of the innovator drug. The brand has witnessed rapid volume expansion since its launch and provided access to over 10,000 patients so far on account of

Consumer Wellness

Zydus Wellness Limited (ZWL), the Companys subsidiary, spearheads the groups operations in the consumer wellness space. ZWL operates in two segments viz. personal care segment and food and nutrition segment and has a portfolio of category-leading health and wellness products.

Throughout the year, the FMCG sector saw steady demand momentum, particularly in rural areas, where small unit packs supported accessibility and affordability for lower-income segments. While urban demand was more subdued, premium categories remained resilient, reflecting a dual trend of value-seeking behaviour alongside the rise of premiumization. As per Nielsen and Kantar World Panel Household data, FMCG market in India grew 9% (6% volume growth) and saw a 3% increase in household penetration during the year. ZWL outpaced the industry growth registering strong 17% growth with 13% volume growth.

In terms of segment-wise performance, the personal care segment demonstrated strong consumer traction, delivering a robust growth of 33.4% during the year. This momentum underscores the segments resilience and brand strength. The Food and Nutrition segment sustained its upward trajectory, registering growth of 13%, supported by category expansion, innovation, and strategic acquisitions.

During the year, the Company retained leadership positions across most categories that it operates in. Continued investments in distribution, category expansion, innovation, media campaigns, sales promotions and digital engagement the affordability of the product compared to the innovator brand.

Overall, the Companys formulations business in India posted sales of Rs.59,315 million during the year, up10%. CAGR (FY21-FY25) of 10%.

India Formulations business revenues over last 5 years (Rs. mn)

FY25	59,315
FY24	53,888
FY23	49,111
FY22	48,125
FY21	40,429

further strengthened competitive positioning and market share across key brands. The Company today nourishes, nurtures, and energizes over 70 million families through an extensive omnichannel presence, including over 2.8 million retail outlets stocking the Companys products. This widespread availability underscores the strength of the brands and the Companys capability to meet daily needs and diverse shopping preferences of Indian consumers.

The Company continued to work on following pillars to grow the business and unlock the value for all the stakeholders.

A. Accelerate growth of core brands

The Company continued to support the growth of both existing and new products through targeted marketing initiatives and a robust Go-To-Market (GTM) strategy, tailored to the fast-paced and competitive FMCG environment. These efforts included multi-channel advertising campaigns, in-store promotions, strategic pricing, and consumer engagement programs aimed at building brand loyalty and driving product trials. The GTM strategy focused on optimizing distribution networks, enhancing visibility at retail touchpoints, leveraging data analytics for demand forecasting, and collaborating closely with trade partners to ensure swift product availability and shelf presence.

Through these integrated efforts, the Company aimed to accelerate market penetration, improve brand equity, and respond dynamically to shifting consumer preferences.

B. Diversifying the portfolio with strategic acquisition and brand acceleration – Rite Bite^?

As part of a long-term strategy to expand the presence in the fast-growing healthy snacking segment, the Company acquired Naturell (India) Private Limited (NIPL) during the year. NIPL owns and operates the brands RiteBite Max Protein^? (focused on protein-fueled healthy snacks) and RiteBite^? (focused on fiber-enriched and balanced nutrition snacks), with a diversified portfolio spanning nutrition bars, cookies, chips, and other healthy snacking formats. The acquisition strategically aligns with the Companys commitment to scale the presence in health-focused, functional food categories.

C. To expand international presence

The Company is focused on scaling its international business by prioritizing key regions such as South Asian Association for Regional Co-operation (SAARC), Middle East and Africa (MEA), South East Asia (SEA) and Indian Sub-Continent (ISC), This includes entering new geographies and introducing innovative products tailored to the regional market needs. During the financial year, the Company continued to strengthen its foundation across international markets. The Complan^? and SugarFree^TM franchises remain the flagship brands in these markets.

D. To grow the scale and improve profitability

The Company has taken various initiatives to increase consumer base and improve profitability.

As consumer preferences and access patterns evolve, the Company remains focused on innovating products and extensions that align with these changing needs and drive category growth. Backed by a strong R&D team and a state-of-the-art facility, the Company has built a robust new products pipeline which is well researched and scientifically backed and substantiated and ready for launch based on market demand.

In todays competitive landscape, identifying the most effective channels to reach both potential and existing customers is essential for expanding brand penetration. The Company continues to grow its iconic brands by crafting fresh narratives and leveraging innovative media strategies to connect with consumers with greater precision. These efforts have successfully increased the reach and impact of its key brands.

The Company has successfully transitioned from a distribution-led model to establishing direct relationships with all modern trade (MT) and e-commerce partners. This has enhanced supply chain efficiency, improved product availability, reduced lead times and delivered margin benefits. Complementing this shift, the Company has steadily increased its focus on organized trade, introducing channel-specific offerings designed to resonate with new-age consumers. As a result, organized trade saliency continued to strengthen, reaching 23% in FY2025, comprising 10% from e-commerce and 13% from MT. Quick commerce has emerged as a key growth driver within e-commerce, now accounting for 41.4% of total e-commerce sales, supported by its lower cost-to-serve advantage over traditional e-commerce channels.

E. Digital transformation and data-led decision-making

As consumer behavior shifts to digital, the Company has fast-tracked its digital transformation to enhance customer engagement, streamline operations, and improve decision-making. Investments in advanced analytics and AI-driven tools have optimized media spend, improved demand forecasting, and streamlined inventory management.

Overall, the Consumer Wellness business grew by 17% and posted revenues of 26,810 million. CAGR (FY21-FY25) of 10%.

Consumer Wellness revenues over last 5 years (Rs. mn)

FY25	26,810
FY24	23,017
FY23	22,338
FY22	19,788
FY21	18,409

US Formulations Business

The Company is one of the leading players in the US generics space, backed by a robust and diverse product portfolio that addresses a wide spectrum of therapeutic needs. The Company is strategically expanding its footprint in the specialty segment through multiple levers to bring additional value to the customers by satisfying their unmet healthcare needs. The Companys wholly owned subsidiary Zydus Pharmaceuticals USA Inc. spearheads the Companys operations in the US.

After scaling the US$ 1 bn revenue mark for the first time in FY2024, the Companys US business sustained traction in FY2025 and delivered strong double digit growth on an elevated base. Growth during the year was driven by sustained volume expansion in base business, contribution from new product launches and supported by a benign pricing environment. Overall, the US was the largest market for the Company during the year, accounting for 49% of consolidated revenues.

Generics Business

The Company distributes over 225 generic products in the US market. Out of these, the Company has leadership position in ~25% of the product families and is ranked amongst top 3 players in over 55% of the product families. In terms of overall ranking, the Company continues to maintain the fifth on prescriptions (Source: IQVIA, Regulatory Insights, MAT March 2025 TRx). The Companys success in the generics space over the years is driven by its comprehensive product portfolio, unwavering commitment to customer service & product quality and an agile and resilient supply chain.

During the year, the Company launched 17 generic products (incl. 2 FTF products) in the US market. The Company received 24 new product approvals (incl. 5 tentative approvals) during the year, taking the cumulative number of approvals to 421. The Company filed 27 ANDAs with the USFDA during the year, taking the cumulative number of ANDA filings at the end of the year to 486.

In order to complement its own portfolio and broaden the range of healthcare options it can provide to the patients, the Company is constantly looking at business development and licensing (BD&L) prospects.

To expand its differentiated portfolio, the Company entered into an exclusive licensing and supply agreement with Viwit Pharmaceuticals for 2 Gadolinium based Magnetic Resonance Imaging (MRI) injectable, contrast agents. Viwit will be responsible for ANDA submission, manufacturing and supply of the products following the receipt of requisite regulatory approval. The Company will exclusively market, distribute, and sell these products in the US market. These will be the first set of contrast agent products in the Companys injectable portfolio for the US market.

Specialty Business

The Companys specialty portfolio built through 505(b)(2) route continued to expand. During the year, the Company received final approval for the third New Drug Application (NDA) filed through 505(b)(2) route viz. Zituvimet ^TM XR i.e. Sitagliptin and Metformin Hydrochloride ER tablets in the area of metabolic disorder management. With this approval, all three NDAs of Sitagliptin (base) and combination franchise were approved through 505(b)(2) route. All the three NDAs have received First-Cycle approval. The Company launched its second 505(b)(2) product viz. Sitagliptin and Metformin IR tablets in the area of metabolic disorder management during the year. The first 505(b)(2) product viz. Sitagliptin tablets was launched in FY2024. The Company also launched all 3 brands of Sitagliptin 505(b)(2) franchise viz. Zituvio^TM, Zituvimet rankamongst theUSgeneric companiesbased ^TM and Zituvimet^TM XR tablets during the year. The Company entered into an agreement with CVS Caremark^?, a CVS Health^? company to add Zituvio^TM , Zituvimet^TM and Zituvimet^TM XR tablets to its template formulary from 1^st January, 2025. On 505(b)(2) products development front, 6 more products are under different stages of development.

The Company also leveraged licensing route to expand the 505(b)(2) products portfolio. The Company has entered into licensing agreement with Synthon BV for a novel oncology product which will be filed in 2026.

The Company is building its presence in the liquid orals space through LiqMeds portfolio. Liquid orals is a large, growing market and serves unmet healthcare needs. It offers greater convenience and ensures better therapy compliance for geriatric and paediatric patients. The Company has supplied

8 products in liquid orals space filed through the 505(b)(2) route. 3 such products are awaiting the USFDA approval.

Orphan and ultra-rare diseases is a niche, focused area of the Companys US specialty business. The Company has acquired three assets in this space so far viz. NULIBRY^?, Zokinvy^? and Zycubo (CUTX101). NULIBRY^? holds marketing authorization in the US, EU and Great Britain for Molybdenum Cofactor Deficiency (MoCD) Type A, an ultra-rare disease. Zokinvy^? holds marketing authorization in the US, EU, Great Britain and Japan for Hutchinson-Gilford Progeria Syndrome, a collection of ultra-rare, fatal, genetic premature aging diseases. Both NULIBRY^? and Zokinvy^? have been commercialised in the US. NULIBRY^? has been granted Orphan Drug Designation (ODD) status by the USFDA. During the year, NDA of CUTX101, a copper histidinate product candidate for treatment of Menkes disease, received the USFDA acceptance and granted priority review by the regulator. The molecule holds Orphan Drug Designation (ODD) and has also been granted Fast-Track designation by the USFDA.

The Company completed second year of its commercial operations in the US animal healthcare space. During the year, the Company received approval for 2 ANADAs and launched 3 new products. Cumulative number of ANADA approvals and launches stand at 9 and 6 respectively.

Going forward, the Company will strive to continue its growth journey in the US on the back of comprehensive generics portfolio built over the years, expanding specialty footprint and enhancing the presence in pediatric rare disease space. This, coupled with strong customer relationships, a pool of manufacturing facilities with capabilities to produce diverse dosage forms, an agile supply chain and efficient cost system will ensure sustained growth trajectory for the US business.

Overall, the Companys US formulations business posted revenues of Rs. 110,500 millon during the year, up 27%. CAGR (FY21-FY25) of 15%. In constant currency terms, the revenues for the year stood at US$ 1,307 million.

US Formulations revenues over last 5 years (US$ mn)

FY25	1,307
FY24	1,049
FY23	926
FY22	780
FY21	856

International Markets Formulations Business

International Markets formulations business will be the third pillar of growth for the Company beside the US and India geographies. The business has consistently delivered robust double-digit growth over last several years with sustained improvement in profitability.

On the International Markets front, the Company is present in select Emerging Markets and European countries. In Emerging Markets, the Company operates in key geographies across Asia Pacific, Middle East, Africa, and Latin America regions. In Europe, the Company has a direct presence in France, Spain and the UK, while other European nations are serviced through a business-to-business approach.

In emerging markets, the Company primarily operates in the branded generics segment, with a strategic focus on key therapeutic areas such as Cardiology, Diabetology, Neuropsychiatry, and Pain Management. To enhance patient outcomes, the Company actively collaborates with Key Opinion Leaders (KOLs) in these specialized fields. Over the years, the Company has launched numerous research and educational initiatives, fostering strong par tnerships with healthcare professionals. Its marketing strategy has evolved from brand oriented approach to a comprehensive, disease-centric model. This holistic approach involves engaging all stakeholders across the healthcare value chain, enabling a more integrated and effective response to disease management opportunities. This strategic shift has significantly contributed to the development of strong and impactful brands across markets. As a result, the Company now boasts of 48 brands in the Million-Dollar Club (MDC), with 14 new additions in the past three years itself.

The pharmaceutical market in Asia Pacific region remained steady driven by rising healthcare access and consistent demand across key therapeutic segments. The Companys business in Philippines and Myanmar benefited from expanding public health programs and private sector investments while in Sri Lanka, the Company maintained the strong growth trajectory through robust distributor partnerships and execution excellence. In the participated market of Sri Lanka, the Company retained its leadership position with a market share of 22%.

Africa region witnessed positive shift during the year with increased investments in healthcare infrastructure and greater focus on essential medicine access. South Africa, the Companys largest market in the region registered strong growth during the year. Uganda and new markets of West and Central Africa also witnessed a strong uptick, reflecting rising demand and efficient distribution capabilities.

On the Latin American front, in Mexico, the Company maintained strong momentum with healthy double- digit growth. In Brazil, the business rebounded to the growth trajectory with double-digit growth compared to a muted performance last year driven by corrective actions implemented during the previous year and increased healthcare spending in the country. The Company was ranked third in the participated Brazilian pharma market.

FY25	21,947
FY24	19,294
FY23	15,794
FY22	14,444
FY21	12,442

JVs and Alliances

Zydus Takeda Healthcare Pvt. Ltd.

Zydus Takeda Healthcare Pvt. Ltd. is a 50:50 JV between the Company and Takeda Pharmaceuticals Co. Ltd., Japan. The JV owns a manufacturing facility in India which is designed to manufacture both Intermediates and APIs. The manufacturing facility caters to Europe and Japan and is compliant with both national and international GMP standards. The APIs produced by the JV cover a broad range of therapeutic categories such as Antiseptic, Analgesic/ Anti-inflammatory, Antihypertensive etc. and are supplied exclusively to the JV partner for its generic portfolio.

During the year, the JVs manufacturing facility at Vashi, Navi Mumbai, completed 25 years of operations in India. The JV site successfully completed the audit by Austrian Agency for Health and Food Safety GmbH (AGES) during the year. JV site also successfully completed ISO 45001:2018 and 14001:2015 recertification audit. The JV continued to implement various efficiency enhancement initiatives through the year to improve the yield and reduce the operating cost and processing time.

Zydus Hospira Oncology Pvt. Ltd.

Zydus Hospira Oncology Pvt. Ltd. is a 50:50 contract manufacturing JV between the Company and Hospira Inc., USA (now part of Pfiz er group), which manufactures oncology injectable products. The JV supplies products to the JV partners to cater to the requirements of the markets assigned to them. The JV has an annual capacity to manufacture upto 7 mn vials and it currently manufactures and supplies around 30 products from the facility. During the year, the JV continued to work towards implementing different ideas in the space of digitalization and automation to ensure smooth and lean manufacturing operations. The JV facility successfully completed inspection by the regulatory authorities of Japan and Taiwan during the year.

Sterling Biotech Ltd.

During the year, the Company acquired 50% stake in Sterling Biotech Ltd (SBL) from Perfect Day Inc., a Temasek Portfolio Company, to form a 50:50 JV with equal representation on the Board. The acquisition marked Zydus foray into specialised biotech products for health and nutrition, specifically catering to consumers who prefer animal-free protein or suffer from lactose intolerance. The JV will establish a state-of-the-art manufacturing facility to manufacture fermented animal free protein to cater to the global markets. The JV will accelerate the production of high-quality and ecofriendly protein products, reduce environmental impact, and cater to the growing consumer demand for fermentation-based and ethically sourced nutrition. This partnership marks a significant step forward in the global effort to transform the food industry and promote a healthier planet.

Foray into Med-tech space

The Company has identified medical technology as a focused area in its quest to address diverse healthcare needs of the patients. Medical technology is a natural extension for the Company which has a proven track record in the lifesciences and wellness space. The Company is focusing on high quality products and solutions for patients. For achieving this, the Company will focus on cutting edge research and innovation around design and engineering along with state-of-the-art manufacturing capabilities "enabling high quality solutions".

The Company will pursue both organic and inorganic growth strategies and leverage strategic partnerships to expand the business. The Company has identified three priority segments in the med-tech space to build its global presence viz. Cardiology, Nephrology and Orthopaedics. Within Cardiology, the Company is building its presence in interventional cardiology. The Company has acquired manufacturing facility of Nano Therapeutics located at Surat, Gujarat. In Nephrology, the Company is setting-up manufacturing plant for producing high end membranes to address growing Chronic Kidney Disease burden globally.

On the Orthopaedics front, during the year, the Company entered into a share purchase agreement to acquire a majority stake in Amplitude Surgical SA, France. Amplitude Surgical is a European MedTech leader in high-quality, lower-limb orthopaedic technologies. It holds leading position in the attractive orthopaedics market with global reach (#2 in France, #6 in Europe, #6 in Brazil). Amplitude has an extensive R&D, manufacturing, marketing and distribution capabilities and global footprint to drive future growth.

Risk Identification, Risk Mitigation and Internal Controls

Zydus Lifesciences Limited is an integrated, global life- follows a structured risk management process involving sciences company. The company operates across the risk identification, impact assessment, and implementation entire value chain in the life sciences space with a strong of mitigation strategies. This approach helps to minimize international footprint. The Companys diversified business the impact of different risks on the Companys operations. portfolio and broad geographic footprint bring in a Key risks being faced by the Company, their impact and the spectrum of strategic risks and operational complexities strategy implemented to mitigate those risks are given that require proactive risk management. The Company below:

Regulatory risk

Risk Involved	Mitigation Strategy
* Penal action by the regulators if regulations of different geographies are not complied with	* Continued evaluation of applicable regulations to ensure compliance at all times
* Increased cost of operations on account of ever- increasing regulatory bar across geographies	* Building a strong Quality culture organisation and adoption of new technologies and automation to ensure better compliance
* Loss of reputation and consequent threat to future operations	* Proactively improve the systems and processes in the light of regulatory actions taken on other players
	* Independent audits and cGMP compliance checks to ensure all time audit readiness

Risk of competition, pricing pressure and Government control on prices

Risk Involved	Mitigation Strategy
* Presence of a large number of players in the generic space results in increased competition which in turn, brings the prices down	* Expand volume of existing products and launch new products
* Entry of a new competitor/s in existing products and markets results in increased competition leading to pricing pressure and impede the ability to increase market share	* Move up the product value chain and launch complex products which have significant entry barriers, limiting new competition
* In some countries, Government regulates prices of medicines and reduces them periodically to make them affordable to patients	* Continue focus on brand building in the branded markets
	* Implement various cost optimization initiatives across the value chain to minimize the impact of price erosion

Risk related to economic and political environment

Risk Involved	Mitigation Strategy
* Frequent political changes including civil unrest and war like situation in different geographies lead to significant uncertainties in Companys operations in such regions	* Continued evaluation of political and economic scenarios across the globe to cap the exposure to the affected regions
	* Securing receivables through letter of credit or advance payments

Litigation Risk

Risk Involved	Mitigation Strategy
* Litigation from innovators if patents granted to them are infringed and claims & penalties associated with such infringement claims	* Implementation of review mechanism to check for possible infringement of intellectual property rights before developing and filings the dossiers
* Litigation with government authorities for alleged overcharging, non-compliance with pricing norms, quality, misbranding, labelling, etc.	* Develop the products through non-infringing processes and formulations
* Litigation with tax authorities on account of difference in interpretation of various provisions due to frequent changes in tax laws	* Ensure compliance with various statutory requirements by leveraging different compliance tools
	y Maintain internal domain expertise in taxation through continued knowledge updation

Risk of delay in/ non-receipt of new product approvals

Risk Involved	Mitigation Strategy
* Loss of business/ opportunity due to delay in receipt of new product approvals/ rejection of dossiers by the regulators	* Implementation of a stage-gate review mechanism to ensure quality of dossiers from early stage of development
* Delay in re-registration of product dossiers impacting the existing business	* Speedy response to queries raised by regulators on product dossiers; Improvement in quality of response based on learnings from deficiency trends
	* End-to-end tracking of new product development (NPD) and new product launch (NPL) activities through a digital tool viz. IRIS

Risk of international operations including foreign exchange risk

Risk Involved	Mitigation Strategy
* Presence in different geographies exposes the Company to the volatility in currencies of different countries; Growth, profitability, investments and debt obligations of the Company in foreign currency vary considerably depending upon the fluctuations	* Adoption of appropriate hedging strategy to safeguard against adverse currency movements
	* Use of natural hedging viz. foreign currency revenues are hedged against foreign currency expenses and foreign currency debt
	* Optimum debt-mix policy

Risk of cyber-attack on digital infrastructure

Risk Involved	Mitigation Strategy
* Disruption of Companys operations caused by cyber security breach on digital infrastructure	* Strengthen cyber security controls, multiple initiatives to lower operational and strategic risk profiles and to take swift actions on emergence of risks across businesses
* Financial, operational and reputational loss

Risk of vulnerability on supply chain

Risk Involved	Mitigation Strategy
* Rising raw materials, utilities and logistics cost impacting the profitability	* Identify key APIs, excipients and other commodity linked products depending upon the socio-economic scenario and take appropriate buying decisions to protect against increase in prices
* Disruption in supply chain on account of geo-political and socio-economic threats resulting in an inability to consistently service the demand of customers	* Regularly monitor and build the safety stock of key APIs whose supply can be impacted on account of potential geo-political and socio-economic threats
	* Identify alternate vendors for key raw materials and develop India based vendors to have better control on cost, quality and supply

Risk of failure to achieve the objectives of large projects

Risk Involved	Mitigation Strategy
* Non-achievement/ significant delay in achievement of objectives of large inorganic opportunities/ capital projects lead to significant impact on profitability and lower return on investments	* Ensure realistic approach to valuation, critical evaluation and due diligence of each and every aspect related to the project
	* Monitor implementation of key strategies planned and achievement of key milestones vs. plan on a periodic basis
	* Establish discipline on investments and debt raising with a policy on capital investment and structure; Defined criteria and threshold for new investments and optimum debt to EBITDA ratio
	* SOP in place to evaluate large capex proposals and periodic review of economic benefits arising from such capex

Risk Management and Internal Control Systems

While it may not be feasible to entirely eliminate the risks inherent in the Companys business operations, significant efforts are made to minimize their potential impact. To this end, the Company has established a comprehensive risk management framework. This system enables regular enterprise-wide assessments and validations of emerging and existing risks. The Risk Management Committee and the Board of Directors frequently review the risk management policy to identify new threats and reassess the severity of ongoing ones. Based on these insights, strategic measures are devised to address and mitigate risk exposure. Additionally, the Company has put in place a series of internal controls across various operations to further reduce vulnerability to risk. In accordance with the Companies Act, 2013, the Company has established an Internal Financial Control (IFC) framework to maintain effective oversight of financial reporting processes. Apart from this, a well-defined system of joint internal audit is in place so as to independently review and strengthen these internal controls. The Audit Committee routinely evaluates the findings of the internal auditors and provides recommendations to further enhance the internal control environment.