Dear Shareholders,

Throughout our five-decade-long journey, Alkem has consistently evolved, expanding into new categories, businesses, and markets worldwide. This transformation has created significant opportunities, enabling us to scale growth and become a leading player in the Indian pharmaceutical industry. In FY 2023-24, we delivered commendable performance and achieved promising results in our newer segments, reflecting our astute foresight. As we drive forward our successful diversification strategy, we remain focused on strengthening the foundation for future growth and exploring newer verticals while delivering on our short-term objectives.

India Business

The Indian market has always been our core focus, currently accounting for ~ 70% of our revenues. Having established ourselves as a dominant player in acute therapies, we have consciously invested in building our chronic portfolio over the past few years, recognizing the shift in disease profiles. This includes launching new divisions, expanding our field force, and shifting our sales focus from general practitioners to specialists.

Our investments have yielded positive results, particularly in the anti-diabetic and cardiac segments, where our new launches have garnered significant market share. Notably, we have grown more than three times the Indian Pharmaceutical Market (IPM) growth in the anti-diabetic market in FY 2023-24. In the future, the anti-diabetic market is projected to be a significant growth lever for IPM. With many anti-diabetic drugs nearing patent expiry, our robust pipeline of branded generics presents exciting business opportunities.

Overall, we remain focused on investing across our chronic portfolio to achieve a more balanced contribution between acute and chronic segments in our total India prescription business. Improving the contribution from the chronic segment will also be a key driver for our future profitability. Further, I am delighted to announce our entry into the field of ophthalmology with the launch of an extensive portfolio of eye care products. In this new segment, we aspire to make significant strides with the introduction of innovative and advanced formulations.

Leveraging our strengths in the acute space, we ventured into the trade generics segment, which has become a key revenue driver, now accounting for ~20% of our total domestic business. According to IQVIA, trade generics hold a 20% market share by volume and 5-6% by value in India. Bolstered by government support, trade generics have significant growth potential, expanding at around 14-15% per annum. We remain focused on leveraging these opportunities and scaling up our generics business in the coming years.

International Business

Our international business delivered robust performance this year, with solid growth in both the US and non-US markets. In the US, we plan to launch 6 to 8 new products every year. We are optimistic that these new launches will significantly contribute to the growth of our US business.

Our strategy - To strengthen our focus on non-US businesses is paying off, with all major markets showing impressive growth in FY 2023-24. We are confident about continuing this momentum and scaling up our non-US operations. This strategic shift will provide a twin benefit: reducing our dependence on the US market and enhancing our overall profitability due to the higher margins these markets offer.

Additionally, we successfully monetized our discontinued St. Louis facility in the US, which was previously dedicated to controlled substance finished dosage manufacturing. Given the severe price erosion and delays in key product launches, the plant was no longer commercially viable. By streamlining our operations and reducing costs, we are better positioned to navigate the competitive US market and steer future growth.

Enzene Business

Enhancing the performance of Enzene Biosciences, our subsidiary specializing in biosimilars and serving as a Contract Manufacturing and Development Organization (CDMO) for biotechnology companies, is another business objective. Our strategic initiatives aim to enhance Enzene’s capabilities and position it for success in the dynamic healthcare landscape.

A key focus is a substantial investment in Enzene’s Research and Development (R&D) endeavors. We are committed to advancing its pipeline of biosimilar products, exploring new therapeutic areas, and optimizing manufacturing processes. This strategic R&D investment ensures Enzene remains at the forefront of innovation, delivering highquality and affordable healthcare solutions. We have already launched seven biosimilar products in India and have a robust pipeline moving forward.

We plan to introduce select biosimilar products in the international market in the coming years. To achieve this, we are actively pursuing strategic collaborations and working on obtaining necessary regulatory approvals. Expanding Enzene’s reach into international markets aims to create sustainable growth and maximize the impact of its innovative products.

Additionally, we are expanding Enzene’s manufacturing capacities with a new state-of-the-art biosimilar facility in the US. This facility, with a capital expenditure of around US$ 50 million, is slated for commissioning by the end of FY 2024-25. We already have a healthy order pipeline for our US CDMO operations and are confident in capitalizing on the vast opportunities to grow it further. Our optimism stems from the increasing trend of biotechnology companies outsourcing various aspects of drug development and manufacturing to specialized partners for a more flexible, cost-efficient structure. Our new facility will provide a local outsourcing solution, making it easier for US customers to work with us. Moreover, our unique proposition of conducting a part of the CDMO services in India offers a cost arbitrage to our global customers.

Business Strategy

At Alkem, agility and adaptability are embedded in our approach. We are quick to respond to market trends, changing regulatory landscapes, and emerging patient needs. This skill allows us to seize opportunities swiftly and navigate challenges effectively.

We are strategically focusing our R&D investments on emerging areas such as novel drug formulations, biologics, biosimilars, and personalized medicine. Additionally, we are exploring advancements in oncology, diabetes, cardiovascular diseases, and central nervous system disorders. Our goal is to develop innovative, high-quality, and affordable healthcare solutions that address unmet medical needs and improve patient outcomes.

This year, we branded our Active Pharmaceutical Ingredients (API) business as Alkem Activa, with the vision of becoming a global player in the sector. Alkem Activa will produce a diverse range of quality APIs and, through strategic partnerships, aims to establish itself as a reliable supplier worldwide. With a focus on sustainability, we also plan to expand its capacity and incorporate advanced technologies.

Over the medium term, our growth levers will include the chronic segment, biosimilars, non-US markets, and trade generics. Additionally, we are set to enter the medical device space and the over-the-counter (OTC) category, which will be other significant business drivers. We are open to exploring inorganic opportunities in these identified segments, provided they are value accretive, synergistic with our plans, and fill portfolio gaps. In essence, we will continue to execute our strategies in a way that makes sense for different markets and geographies, aligning resources behind the most excellent opportunities.

In conclusion, while we are incredibly proud of our accomplishments, we will maintain a relentless focus on the future by charting new growth horizons. Our success is due to the dedication of our team worldwide, and I extend my heartfelt gratitude to them. I would also like to take this opportunity to thank our customers, partners, suppliers, healthcare providers, and shareholders for their unwavering support and trust. Alkem remains committed to scaling growth and delivering long-term value to all its stakeholders.

Warm regards,

Sandeep Singh Managing Director