Alembic Pharmaceuticals Ltd

Dear shareholders,

I am honoured to communicate with you through the Annual Report. Our journey over the decades has been characterised by resilience, innovation, and an unwavering commitment to delivering healthcare solutions for millions of individuals worldwide. As we navigate the complexities of our global landscape, increasingly affected by the challenges of progressive climate change, heightened human conflict, and protectionist policies, our dedication to these principles remains resolute.

Fiscal 2025 represented a period of recalibration and thoughtful innovation. Our research and development-driven commercial strategy, together with an integrated operating model, enabled us to navigate effectively through an environment characterised by geopolitical uncertainties while maintaining stable performance. Furthermore, we fortified our core business, ventured into new opportunities, and established ambitious goals for long-term sustainable growth. As we progress, we will maintain a rigorous focus on disciplined execution and operational efficiency in light of ongoing macroeconomic uncertainties.

Given advancements in technology and our understanding of diseases, we can envisage a world where drug manufacturers and health systems harness today's wealth of data to drive unprecedented levels of scientific innovation and personalised care.

Industry practitioners largely agree on the key trends shaping the future of pharma. As shifts in the broader health ecosystem unfold, five immediate dynamics stand out in determining the pharma business model of the future:

The technological breakthrough will fundamentally alter how work is executed and decisions are rendered. The outcomes may encompass enhanced predictions, accelerated actions, and superior results. Artificial Intelligence has the potential to empower the organisations in the future.

Integrating data and computational power has facilitated a deeper understanding of the human body. This improved comprehension is poised to enhance the identification of risk factors, reveal novel pathways for treatment, and propel the discovery of groundbreaking pharmaceuticals.

Globally, including within the premium-priced United States market, efforts are intensifying to mitigate the cost of pharmaceuticals. The strategies employed to exert pressure encompass direct government intervention, such as the Infiation Reduction Act, and competitive pricing tactics within the commercial market, capitalising on the expanded array of treatment options.

Many consider their health a paramount concern due to its significant influence on personal finances and overall quality of life. In the foreseeable future, consumers will possess enhanced access to their data, including genetic history and biomarker information derived from wearable devices, as well as applications such as ChatGPT, to inform their decision-making processes. Furthermore, their involvement in the decision-making landscape and their expectations for value are anticipated to rise.

The next era of volatility in the world unfolds, owing to devastating cyber-attacks, geopolitical unrest, natural disasters and societal polarisation among the trends driving a new era of global volatility.

The trends above will necessitate fundamental changes in the pharmaceutical market, alongside anticipated policy and regulatory shifts implemented by newly elected governments worldwide.

India's manufacturing capabilities, cost-e_ectiveness, and highly skilled workforce have established it as a leader in the global pharmaceutical sector. To capitalise on growth opportunities arising out of these emerging trends, the domestic pharma sector will need to: 1) Unleash pharma's value-driven research and innovation potential In the global arena, India's forthcoming frontier shall concentrate on disruptive innovation. Establishing a resilient innovation ecosystem designed to promote collaborative engagement among various stakeholders will be pivotal in facilitating this transition towards value-driven innovation.

2) Become an integral part of the futuristic global pharma supply chain Manufacturing and supply chain management are crucial in the pharmaceutical industry. Recent trends, including pricing, technology implementation, sustainable practices, personalised therapies, and innovative healthcare models, have increased complexities in operations. These trends require a shift in priorities and a transformation of the sector. This evolving landscape, shaped by macroeconomic shifts and geopolitical developments, positions India at the forefront of the ‘China+1' opportunity.

The pharmaceutical industry in India stands at a pivotal juncture. In recent years, the growth rate, measured in rupee terms, has softened to mid-single digits. For pharmaceutical enterprises to flourish within the domestic context, enhanced adaptability and flexibility will be essential for achieving success in this ever-evolving environment, as traditional go-to-market models face disruption and the manner of customer engagement has undergone a significant change.

As healthcare ascends to a prominent position on the policy agenda, effective collaboration with government entities will significantly influence the future trajectory of the sector. The tightening of policies and expedited regulatory approvals has led to heightened competition, necessitating that companies achieve precision and accuracy from the outset (first-time-right). Furthermore, with intensified scrutiny from regulators, an emphasis on quality assurance and control has become increasingly imperative.

The industry is experiencing a notable series of transformations, characterised by transitioning from the "Make in India" initiative to the "Develop in India" paradigm. This evolution is accompanied by heightened globalisation, an increasing focus on rural markets, an emphasis on value addition as opposed to mere pricing, and a shift from a competitive to a collaborative mindset, particularly evidenced by the convergence of sectors including Medical Devices, Pharmaceuticals, and Disposables.

Pharmaceutical organisations are transforming alignment with Fast-Moving Consumer Goods (FMCG) and consumer-oriented enterprises; the management of various channels and consumer bases is becoming progressively vital. The increasing prominence of pharmacists compared to physicians, alongside the empowerment of patients, serves as a significant driving force.

Digitisation will be crucial in altering the sector and integrating the ecosystem. To maintain competitiveness, companies must exhibit agility in adapting to the evolving relationship dynamics instigated by new digital entrants and invest in data and analytics capabilities.

I am pleased to convey that we have made significant progress in aligning our business operations with key trends poised to influence the pharmaceutical industry in India and globally. Our augmented research and development budgets for creating niche formulations, steadfast commitment to quality, successful FDA audit compliance, time-tested supply chain, and investments in advanced technological solutions will enable us to better capitalise on emerging opportunities, ultimately yielding superior returns. Furthermore, our ongoing communication and collaboration with leaders in the pharmaceutical industry will facilitate our ability to keep pace with evolving sector dynamics and proactively adjust our strategies as necessary.

As we move forward, we are committed to creating a sustainable and prosperous future for all our stakeholders. Your continued support and trust are invaluable to us, and we look forward to achieving many more milestones together.

For our India branded business, which is key business vertical, we have repurposed our processes supported by digital technology to make our customer engagements more meaningful and our operations more agile and efficient.