Beta Drugs Ltd Management Discussions

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 the Management Discussion and Analysis Report (MDAR) is structured as follows:

? INDUSTRY STRUCTURE, DEVELOPMENTS, OPPORTUNITIES & THREATS:

According to the IMF, the global economy is estimated to expand by 3% in 2023 and 2024. The World Health Organization (WHO) announced in May that it no longer considers COVID-19 to be a "global health emergency." Supply chains have largely recovered, and shipping costs and suppliers delivery times are back to pre-pandemic levels. But forces like high inflation that hindered growth in 2022 persist. Rise in central bank policy rates to fight inflation continues to weigh on economic activity and may dampen the growth prospects of the global economy.

As per IQVIA, global medicine market is expected to grow at 3-6% CAGR through 2027, reaching about $1.9Tn in total market size. Oncology is forecasted to grow the fastest in terms of global spending at a CAGR of 13-16% through 2027. Oncology is projected to add 100 new treatments over five years, contributing to an increase in spending of $184Bn to a total of more than $370Bn in 2027 and facing limited new losses of exclusivity. While most major therapy areas have seen growth in medicine use in the last decade, oncology usage has far exceeded the others with a 10-year CAGR as of 2021 of 15.3%.

The increase in oncology spending is expected to be driven by early diagnoses of patients, continued introduction of new drugs, and wider access to novel cancer drugs in more countries beyond the major developed countries where they often launch first and longer treatments for medicines with survival benefits.

The oncology market in India is growing at a better rate than the overall pharma industry growth. Since cancer is the second largest cause of death in the country, the Indian market is characterized by a huge demand for cancer drugs. It is a highly fragmented market with many foreign and domestic players. The huge increase in the number of cancer cases, especially in lung cancer and breast cancer; changes in the cancer treatment scenario, development of alternative cancer therapies, increased cancer health insurance coverage and the increasing amount of foreign direct investment (FDI) is contributing to the growth of the market. The increased prevalence of cancer is primarily due to unhealthy lifestyles, and the increasing geriatric population. However, the high cost of products is hindering the market growth.

Beta has identified four pillars for sustainable future growth and build strong defensible moats in the oncology space. The four pillars are:-

1. Building compelling brand equity for leading products through strong clinical differentiation

2. Launching innovative products addressing unmet needs through novel formulation development

3. Integrated manufacturing with best-in-class quality accreditations

4. Leveraging world class Indian manufacturing infrastructure to penetrate export geographies.

Beta has been able to build a significant presence in branded oncology business in India and is ranked among the top 10 oncology companies. Many of the key products of the company are ranked among the Top 5 in their respective categories. We have built a solid credibility among prescribers of being high quality suppliers of life saving oncology formulations who have made cancer medicines affordable to large sections of the society. Going forward Beta will continue to focus on building a solid franchise in the domestic market through robust brand building initiatives focusing on patient outcomes and strong clinical differentiation

We have a large pipeline of new product launches which address the white spaces in oncology. We are on track to offer innovative products through novel formulation development to provide clinicians with better solutions and improve patient outcomes. Over the next three years Beta would be launching oncology formulations in novel NDDS platforms which would be the first of its kind in the Indian oncology market. Beta Drugs is continuously increasing its spend on R&D and is building its capabilities so as to become nimble and responsive to market needs. Betas R&D strengths are in developing novel molecules that are going off patent in non-infringing processes, scaling complex chemistry challenges and novel formulation development. The company is in the midst of developing new drug delivery systems, new dosage formulations and applying the latest technology for better processes. The Research centre is proficient in developing, scaling up and commercializing various dosage forms spread across tablets, capsules, oral liquids and injectables (solutions, suspensions, lyophilized, etc.)

The company has proven experience in managing complex product development including Azacitidine Oral, Ready to Use Gemcitabine & Docetaxel and Enzalutamide 160mg formulations. Its R&D expenditure almost doubled as compared to the last year. Beta has a pipeline of twenty-five Oncology molecules wherein it would be either First to Launch or among the First Few to Launch. For all these molecules the work on getting its API manufactured in-house is already in advanced stages.

We started with the API business in 2018-2019 as it was our firm belief that improving efficiency and quality are only possible if we have control over the entire supply chain. The backward integration into API has provided us with better margins, higher yields, reduced reliance on external suppliers and improved the quality of our products. Going forward API development will be core to launching of new products and maintaining market leadership in select products. We also plan to export APIs to improve the operating leverage in the API business. Beta has been allotted 14 acres land for 95 years lease in a special area allocated for API & intermediates in the vicinity of its current plants which we plan to utilize for our future expansion.

Betas facilities were approved by INVIMA and ANVISA in 2023 and the company has now focused its efforts on accelerating product filings in Latin America. We expect to be audited by EUGMP later this year which will open markets in CIS, Russia and other developing markets. Beta is well positioned to leverage its Indian low-cost manufacturing expertise to gain traction in the above-mentioned countries and capture significant market share. We will continue to grow our exports business both in formulations and API over the next three years to become a leading supplier of high-quality oncology drugs across developing countries.

? RISK MANAGEMENT FRAMEWORK:

During the last three years, the company has increased its focus on building its innovative product pipeline in the oncology space and be ready to realize significant growth opportunities both domestically and globally. Your Company has continued to be the preferred supplier of many leading OEMSs and has been successful in expanding its approval base, adding leading players from the industry. Therefore, we expect that your Company will continue to be in a position to gradually expand its market reach and improve its market share. The Company regularly insures all its assets to enable itself in case of any mis-happening. The Company has formed a risk management team which constantly monitors the Indian and international markets and guides the management of any sort of prevailing risk to the company. The commodities prices being internationally traded are affected by the global market demand and supply forces and the dollar rate. The risk management team plays a major role here. Moreover, the industry is labour oriented and business operations of the Company may be materially affected by strikes, lock outs or work stoppage.

? SEGMENT WISE OR PRODUCT WISE PERFORMANCE:

Your company has only one segment that is trading and manufacturing of pharmaceutical products.

? OVERVIEW & OUTLOOK:

The Indian pharmaceutical industry has advanced steadily and evolved into a preferred destination for high-value pharma products and APIs for drug manufacturers worldwide. Top notch capabilities and advantageous market conditions over the last many years have ensured that India continues to be one of the most profitable pharma markets across the world. It remains an attractive destination for generic R&D and manufacturing of pharmaceuticals owing to its strong capabilities across the value chain.

Oncology drugs market is expected to grow at a fast clip across the world primarily driven by an ageing population and lifestyle changes making population susceptible to cancer. In India the Oncology drugs market is expected market to grow in double digits for the next many years to come. Therefore, Beta Drugs being a leader in the oncology segment has long runaway ahead both in terms of opportunities and growth.

Our multiple segments of revenue provide us diversification benefits and substantial financial strength. Our financial strength enables us to reinvest in two key areas: building commercial capabilities both domestic and international and building a robust pipeline while expanding our technology capabilities.

? RISK AND CONCERNS:

During the last three years, the company has increased its focus on building its innovative product pipeline in the oncology space and be ready to realize significant growth opportunities both domestically and globally. Your Company has continued to be the preferred supplier of many leading OEMSs and has been successful in expanding its approval base, adding leading players from the industry. Therefore, we expect that your Company will continue to be in a position to gradually expand its market reach and improve its market share. The Company regularly insures all its assets to enable itself in case of any mis-happening.

The Company has formed a risk management team which constantly monitors the Indian and international markets and guides the management of any sort of prevailing risk to the company. The commodities prices being internationally traded are affected by the global market demand and supply forces and the dollar rate. The risk management team plays a major role here. Moreover, the industry is labour oriented and business operations of the Company may be materially affected by strikes, lock outs or work stoppage.

? INTERNAL CONTROL SYSTEM:

The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company. The Audit committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

? FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year, Revenue of the Company increased by 26.42% i.e. from Rs 12,570.47 lakhs to Rs 15,891.74 lakhs. Profit before tax increased by 25.04% i.e. from Rs. 2,016.16 lakhs to Rs.2,520.95 lakhs. Profit after tax increased by 32.07% i.e. from Rs. 1424.65 lakhs to Rs.1881.61 lakhs.

? HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS:

Your Company firmly believes that its human resources are the key enablers for the growth of the Company and important asset. Hence, the success of the Company is closely aligned to the goals of the human resources of the Company. Taking into this account, your Company continued to Invest in developing its human capital and establishing its brand on the market to attract and retain the best talent. Employee relations during the period under review continued to be healthy, cordial and harmonious at all levels and your Company is committed to maintain good relations with the employees.

? KEY FINANCIAL RATIOS:

Following are ratios for the current financial year and their comparison with preceding financial year:

Sr. No. Ratios	As at March 31, 2023	As at March 31, 2022	Variance	Explanation for any change in the ratio by more than25% as compared to the preceding year
1 Debtor Turnover	4.21	4.79	-11.99%	-
2 Inventory turnover	8.91	10.25	-13.03%	-
3 Interest coverage ratio	31.13	49.91	-37.62%	Due to increase in interest expenses by 2 times while EBITDA has increased by 1.27 times.
4 Current Ratio	2.70	2.43	11.23%	-
5 Debt-Equity Ratio	0.05	0.09	-36.09%	Due to increase in reserves by Rs. 18.79 crores.
6 Operating Profit Margin(%)	16.50%	16.48%	0.11%	-
7 Net Profit Margin (%)	11.92%	11.41%	4.44%

• Return on Net worth in financial year 2022-23 is 19.55% whereas it was 18.39% in the previous year, there is a variance of 6.29%, this is due to increase in net profit by 32.08% whereas the reserves has only being increased by 24.26%.

? CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis Report, describing the Companys objectives, estimates and expectations may constitute Forward Looking Statements within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied.

Dated: 01.09.2023	By Order of the Board of Directors
Place: Panchkula	sd/-
	Rahul Batra
	Chairman & Managing Director
	(DIN: 02229234)