CFO’s
Letter

Commitment to resilient and responsible results for all our stakeholders

Ramesh Swaminathan

Dear Shareholders,
As the COVID-19 pandemic rages on in different parts of the world at varying intensities, Lupin has been at the forefront of augmenting the delivery of critical healthcare services by ensuring uninterrupted supply of life-saving drugs. This period of enduring crisis has driven us to redefine our purpose and vision, and we are committed to providing global communities with access to quality healthcare at affordable prices, safeguarding the health and well-being of our people and supporting the communities we operate in. The inherent strength and resilience of our business model has yet again allowed us to navigate the challenging business environment and remain relevant in these challenging times.

It is my great pleasure to present Lupin’s first Integrated Report (IR) to you. We firmly believe that our value proposition serves a larger purpose and apart from reporting on our financial performance for our shareholders, this year we have started to articulate our impact across the six resource capitals of the Integrated Reporting framework. The journey of transition to the framework has been one of self-discovery for Lupin and the Environment, Social and Governance (ESG) materiality assessment has allowed us to reassess our priorities across the ESG aspects relevant to our stakeholders. This year’s IR marks the beginning of a new era in Lupin’s commitment to transparent and fair disclosure of our ESG performance, and compliance to the Securities and Exchange Board of India’s (SEBI) conceptual shift towards a more holistic reporting paradigm.

Our Performance in FY21

EBITDA acceleration continued through FY21 led by new launches, cost optimization and restructuring. This period has been marked by 15 launches in the US market. The sequential uptick in our US generics business has been driven by Albuterol and other new launches, notwithstanding demand disruption in our seasonal products. With respect to our Inhalation and Biosimilar portfolio, we have successfully launched our first inhalation product, gProAir HFA (Albuterol sulfate) in the US. We have also expanded our Women’s Health product portfolio in Canada through partnership with Endoceutics to commercialize Intrarosa. We continue to partner with Mylan to expand access to biosimilar Etanercept across EU. In the EU territories, we have also signed distribution agreements for our orphan drug Namuscla®.

Ramesh Swaminathan

In the Indian Pharma Market, we maintained our 6th rank, and the year was characterized by 26 brand launches across the Cardiac, Anti-diabetic, Respiratory, and Immunomodulator therapeutic segments. We have entered a consortium for enhancing digital infrastructure, which will benefit all our stakeholders and further the National Digital Health Mission (NDHM) vision, thereby enabling access to genuine medicines and enhanced user experience for patients.

In FY21, revenues from our API business registered a growth of 6%. We maintain our strong leadership status in the anti-TB institutional business category.

Manufacturing and Quality

Our manufacturing facilities continue to be our greatest assets in producing cost-effective world-class drugs. Strategic investments in several projects to increase automation, have ensured lower incidence of defects and helped us maintain a competitive edge in manufacturing. Such initiatives will be rapidly scaled up across our manufacturing facilities.

Our focus on ‘Quality First’ and our Global Quality Action Plan ensures the highest degree of internal controls, which ultimately prepares our sites to excel during regulatory audits. 9 of our 15 sites are USFDA inspected. As a testament to our efforts, we have received six Gold Awards and one Silver Award at the Quality Circle Forum of India (QCFI) for various improvement projects implemented at our manufacturing sites.

Supply Chain Management

Our investments in building a global supply chain leveraging business intelligence, reporting and forecasting systems have helped us ensure business continuity, even in the times of the pandemic. We have been committed to ensuring uninterrupted supply of our life-saving drugs. We continue to closely monitor our supply chain dependence on individual suppliers and mitigate risks by ensuring buffer stocks of raw materials and diversified procurement through long-term contracts with multiple suppliers. This is necessary to ensure uninhibited supply of finished products to our customers located in over 100 countries.

Building for the Future

We are sharpening our focus on making a measurable impact in everything we do. Cost reduction in the generic industry is imperative given the constant price erosion. Whilst accelerating strategic cost reduction, we have been going beyond traditional measures and with an eye towards the future, are focusing on digital tools to increase productivity and lower costs across the entire value chain. We have laid out an elaborate digital road map straddling manufacturing, quality, supply chain and R&D that will help in developing new value propositions that will boost effectiveness and efficiency across the organization. Digital innovation and technologies so employed will embrace development of deeper channel partner and customer insights. This will also usher in an era of continuous monitoring of returns from both capital and revenue expenditure.

The Road Ahead

Between FY21 to FY23, we are accelerating delivery of our global inhalation portfolio and our biosimilars pipeline, while continuing to strengthen the worldclass R&D capabilities at our 7 R&D sites. Our focus will be on increasing the proliferation of our products through our commercial capabilities, driven by our marketing offices in 23 countries.

Despite the challenges posed by the COVID-19 pandemic to our manufacturing operations and global supply chain, we are optimistic that the business environment will comprehensively improve, and the global macroeconomic environment will mark a gradual return to normalcy. We will continue to consolidate our strong market position and focus on driving accelerated growth in FY22 by being at the forefront of addressing patient health and well-being.

Kind regards,

Ramesh Swaminathan Executive Director,
Global CFO and Head Corporate Affairs