Sun Pharma Advanced Research : FY 2021-22

Sun Pharma Advanced Research Company Ltd.

Annual Report 2021-22

Innovations

inspired by

life

Contents

2 56

Management	Business
Discussion	Responsibility
and Analysis	Report

14 63

Board's	Financial
Report	Statements

31

Corporate

Governance

Report

Check out our online report for simple navigation across your devices.

www.sparc.life

Disclaimer:

Statements in this "Management Discussion and Analysis" describing the Company's objectives, projections, estimates, expectations, plans or predictions or industry conditions or events may be "forward-looking

statements"	within the meaning
of	applicable	securities	laws
and	regulations.	Actual	results,
performance	or achievements could

differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand supply conditions, competitors' pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour unrest or other difficulties. The Company assumes no responsibility to publicly update, amend, modify or revise any forward-looking statements, on the basis of any subsequent development, new information or future events or otherwise except as required by applicable law. Unless the context otherwise requires, all references in this document to "we", "us" or "our" refers to Sun Pharma Advanced Research Company Limited.

• All brands and trademarks are the properties of their registered owners.

Scan the QR Code for addtional information

Corporate Information

Board of Directors

Mr. Dilip S. Shanghvi

Chairman and Non-Executive Director

Mr. Sudhir V. Valia

Non-Executive Director

Dr. T. Rajamannar

Non-Executive Director

Ms. Bhavna Doshi

Independent Director

Dr. Ferzaan Engineer

Independent Director

Dr. Robert J. Spiegel

Independent Director

Key Managerial Personnel

Mr. Anilkumar Raghavan

Chief Executive Officer

Mr. Chetan Rajpara

Chief Financial Officer

Mr. Dinesh Lahoti

Company Secretary

Auditors

S R B C & Co. LLP

(Registration No. 324982E/E300003)

Bankers

Kotak Mahindra Bank Ltd.

ICICI Bank Ltd.

Offices & Research Centres

Registered Office & Research Centre

Plot No. 5 & 6/1, Savli G.I.D.C. Estate, Savli - Vadodara Highway, Manjusar, District Vadodara - 391 775.

Corporate Office & Research Centre

17-B, Mahal Industrial Estate,

Off Mahakali Caves Road,

Andheri (East), Mumbai - 400 093.

Research Centres

• F.P.- 27, Part Survey No. 27, C.S. No. 1050, T.P.S. No. 24, Tandalja, Vadodara - 390 012.
• 907/4, GIDC, Makarpura, Vadodara - 390 010.

Registrar & Transfer Agent

Link Intime India Pvt. Ltd.

C 101, 247 Park, LBS Marg, Vikhroli West,

Mumbai - 400 083.

Tel: [phone] | [phone]

Fax: [phone]

E-mail: [e-mail]

Sun Pharma Advanced Research Company Ltd

Management Discussion and Analysis (MD&A)

Global Pharmaceutical Industry

During the FY 2021 - 2022, the biopharmaceutical industry continued to innovate and bring novel medications to patients worldwide. Apart from making ground-breaking contributions to COVID-19 in the form of vaccines and therapeutics, the biopharmaceutical industry has also done a remarkable job of adapting and re-focusing, overcoming many operational and organisational challenges.

Biotech sector soared during the pandemic, with venture capital investment and IPO volumes hitting all-time highs. But recently, stock valuations have plummeted as a result of being part of a larger market downturn, pricing challenges and the concern that biotech stocks are at unsustainable valuation levels.

Industry leaders believe that the business outlook for pharma companies continues to be positive. The cautious positive outlook is driven by multiple factors, key factors supporting the outlook are:

• New therapeutics are queued up in the pipeline: Different therapies are still in early development, spurred by advances in gene editing and cell therapy.
• Big pharma is prospering and ready for deals: Big pharma companies have "historic" amounts of cash on hand for deals and partnerships. Many companies have experienced growth and are emboldened with stronger balance sheets from which to invest.

• The growing body of knowledge: Leading to the development of new therapeutic strategies that increase treatment options and improve outcomes for patients. Many patient populations that previously were treated with nonselective agents are now receiving targeted agents that are tailored to the molecular and clinical features of their disease.

The cautious outlook has led to increase in investors selectivity for the potential investment opportunities. While the markets may ease but funding is expected to remain challenging at the same time late stage data backed companies and technology validations would continue to attract significant level of capital.

Overall, the outlook for the sector is positive and that is evident from the growth expected in the drug usage and sales for the pharmaceuticals worldwide.

The worldwide total prescription drug sales are forecasted to increase at a 6.4% compound annual growth rate (CAGR) from USD 1031 billion in 2021 to USD 1407 billion in 2026. This includes generics, orphan drugs, and other prescribed drugs.1

The growth in prescription drug sales is backed by a pipeline of continuous development of Novel Active Substances (NASs). The USFDA designated 44 (61%) of the 72 NASs introduced in the United States in 2021 as first- in-class, and over half had an orphan drug designation, suggesting that they were intended for patients with uncommon conditions. This is an increase over the last

Worldwide Total Prescription Drug Sales1

ww Prescription Drug Sales (USD bn)

1,600

1,400												+6.4% CAGR 2021-26
1,200
1,000
800														967	1,040
											846	901
											817
600										794
								689
						659	681
			613		614	624
	598	598	598
400
200	66	72	78	82	90	99	111	123	138	155	172	194	221	248	268
	89	92	96	99
0	67	70	76	78	81	82	74	74	74	82	85
2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025	2026
					Generics	Orphan	Prescription excl. Generics & Orphan

2

Annual Report 2021-22

five years, when the proportion of approved NASs that were first-in-class drugs, stayed stable around 43%. In the same five-year period, 51% of new drugs were designated as orphan drugs.2

Orphan drugs are used to treat rare diseases, defined as less than 20,000 cases in the US. Multiple biopharma companies have focused their innovation on this area due to the abbreviated regulatory pathways in the US. Other developed countries have followed suit and enacted favorable regulatory policies, allowing for growth over the last decade. It is estimated that the orphan drugs market was about USD 155 billion in 2021 and is expected to reach USD 268 billion by 2026.1

The USFDA (US Food and Drug Administration) kept pace on approval of new drugs, the US drugs regulator approved 58 novel drugs last year, the highest number for the last three years and well above the 10-year average of 48 novel drugs. With travel limitations blamed for decision delays in a number of cases, this uptick could presumably have been steeper under more normal conditions.3

In addition to drug approvals, during the FY 2021-2022 USFDA also made notable regulatory decisions. Some of the significant events included the acceptance of an IND (Investigational New Drug application) for the

Management Discussion and Analysis (MD&A)

use of CRISPR, the first human trials using gene-editing technology. The USFDA drafted guidance to improve the flexibility and efficiency of drugs under development, including how to combine multiple therapies into novel trial designs like single "umbrella" trials to maximise compatible evidence generation across medicines.

Also, the USFDA updated its advice on oligonucleotides, real-world evidence (RWE), and digital health technologies, among other areas of drug development.2

The conducive development environment has led to an increase in investment from the past 2 years, especially in the year 2021.The global Research & Development (R&D) spend is expected to reach USD 254 billion at a CAGR of 4.2% from 2020 to 2026.1 While the bulk of this increase in R&D spend is expected to come from large biopharma companies, smaller players with cutting edge science are expected to have access to capital to support their R&D. Among large pharmaceutical companies, Roche had the largest R&D budget in 2021 at USD 16 billion (14.8 billion Swiss francs)4 and is expected to retain this position in 2026.1 In the United States, the total R&D spending among major pharmaceutical companies in 2020 stood at USD 72 billion, which was approximately 21.4% of total sales.5

Statements Financial Reports Statutory

USFDA Approvals of New Drugs3

	70
				61
	60				58
			56		56
			54
Count		49			49
50
Approval
42
	40
		32
	30		25
	20
	2012	2014	2016	2018	2020
			US New Drugs Approval Count

3