Zydus Lifesciences Limited has informed the Exchange about Investor Presentation

Code: 532321

Code: ZYDUSLIFE

May 18, 2023

Listing Department BSE LIMITED P J Towers, Dalal Street, Mumbai–400 001

Listing Department NATIONAL STOCK EXCHANGE OF INDIA LIMITED Exchange Plaza, C/1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai–400 051

Re:

Investor Presentation

Dear Sir,

Please find attached the Investor Presentation on the audited financial results for the quarter / year ended on March 31, 2023.

Please find the same in order.

Thanking you,

Yours faithfully, For, ZYDUS LIFESCIENCES LIMITED

DHAVAL N. SONI COMPANY SECRETARY

Encl.: As above

Zydus Lifesciences Limited Earnings Presentation: Q4 and Full Year FY23

18th May, 2023

1

Disclaimer and Safe Harbor Statement

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•

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THIS PRESENTATION (PRESENTATION) IS NOT AN OFFER TO SELL ANY SECURITIES OR A SOLICITATION TO BUY ANY SECURITIES OF ZYDUS LIFESCIENCES LIMITED OR ITS SUBSIDIARIES OR JOINT VENTURES (TOGETHER, THE “COMPANY”). The material that follows is a Presentation of general background information about the Company’s activities as at the date of the Presentation or as otherwise indicated. It is information given in summary form and does not purport to be complete and it cannot be guaranteed that such information is true and accurate. This Presentation has been prepared by and is the sole responsibility of the Company. By accessing this Presentation, you are agreeing to be bound by the trading restrictions. It is for general information purposes only and should not be considered as a recommendation that any investor should subscribe / purchase the Company shares. This Presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “projects”, “expects”, “intends”, “may”, “will”, “seeks” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, aims, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Presentation and include statements regarding the Company’s intentions, beliefs or current expectations concerning, amongst other things, its results or operations, financial condition, liquidity, prospects, growth, strategies and the industry in which the Company operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward- looking statements are not guarantees of future performance including those relating to general business plans and strategy of the Company, its future outlook and growth prospects, and future developments in its businesses and its competitive and regulatory environment. No representation, warranty or undertaking, express or implied, is made or assurance given that such statements, views, projections or forecasts, if any, are correct or that the objectives of the Company will be achieved. There are some important factors that could cause material differences to Company’s actual results. These include (i) our ability to successfully implement our strategy (ii) our growth and expansion plans (iii) changes in regulatory norms applicable to the Company (iv) technological changes (v) investment income (vi) cash flow projections etc.

The Company, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information contained in this Presentation, unless otherwise specified is only current as of the date of this Presentation. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this Presentation, the information contained herein is based on management information and estimates. This document is just a Presentation and is not intended to be a “prospectus” or “offer document” or a “private placement offer letter” (as defined or referred to, as the case may be, under the Companies Act, 2013). It is clarified that this Presentation is not intended to be a document offering for subscription or sale of any securities or inviting offers from the Indian public (including any section thereof) or from persons residing in any other jurisdiction including the United States for the subscription to or sale of any securities including the Company’s equity shares. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any securities. None of the Company’s securities may be offered or sold in the United States without registration under the U.S. Securities Act of 1933, as amended, except pursuant to an exemption from registration there from. This document has not been and will not be reviewed or approved by a regulatory authority in India or by any stock exchange in India. This document and its contents should not be forwarded or delivered or transmitted in any manner to any person other than its intended recipient, and should not be reproduced in any manner whatsoever.

2

R&D

Highlights of Q4 FY23

Q4 FY23: At a Glance

Revenues from Operations*

Rs. 50,106 mn 32% YoY

EBITDA & Margin %

Rs. 12,556 mn 25.1% of revenues 75%YoY

Rs. 3,541 mn 7.1% of revenues

Net Profit ex. Exceptional

Rs. 8,979 mn 126% YoY

Business-wise Sales Break-up (Rs. mn) and YoY Growth

API 3% ▼8%

Alliances 1% ▼18%

EM & EU 9% ▲30%

Total 48,525 ▲30%

US 46% ▲58%

India Form 26%

▲11%

Consumer Wellness 15% ▲12%

❑ Total revenues grew 32% yoy, led by US formulations business.

❑ India formulations business continued to deliver consistent performance

with 12% yoy ex-COVID growth (reported growth was 11%).

❑ Consumer Wellness business continued to maintain leadership position

in key brands despite softer consumer demand.

❑ US formulations business continued to grow on a sequential basis, aided

by volume expansion in existing products and new launches.

❑ All major geographies of Emerging markets and Europe business posted

strong growth.

❑ EBITDA margin stood at 25.1%, up 620 bps yoy and 260 bps qoq.

❑ Net cash: Rs. 5,461 mn (at 31-Mar’23) vs Rs. 632 mn (at 31-Mar’22).

❑ Capex (organic) for the quarter: Rs. 2,040 mn.

❑ Net debt to EBITDA: (-) 0.14x (at 31-Mar’23) vs (-) 0.02x (at 31-Mar’22)

Note: * Revenues from Operations include net sales and other operating income.

3

Key Financial Metrics (1/2)

Total Revenues (Rs. mn)

Gross Profit (Rs. mn) and Gross Margin %

38,056

42,571

50,106

151099

172374

60.7%

64.5%

27,467

23,098

66.2%

33,146

63.3%

95,647

63.4%

1,09,273

Q4FY22

Q3FY23

Q4FY23

FY22

FY23

Q4FY22

Q3FY23

Q4FY23

FY22

FY23

Total R&D (Rs. mn) and % to Revenues

EBITDA ex one-offs (Rs. mn) and EBITDA Margin %

7.1%

8.1%

3,446

7.1%

3,541

2,697

6.9%

10,406

7.2%

12,363

22.6%

22.5%

25.1%

23.3%

23.1%

12,556

35,239

39,802

8,612

9,560

Q4FY22

Q3FY23

Q4FY23

FY22

FY23

Q4FY22

Q3FY23

Q4FY23

FY22

FY23

4

Key Financial Metrics (2/2)

PAT ex. Exceptional, One-offs and Discontinued ops.(Rs. mn)

Organic Capex (Rs. mn)

9,001

26608

22988

6,225

5,250

2,668

2,554

2,040

11,218

9,579

Q4FY22

Q3FY23

Q4FY23

FY22

FY23

Q4FY22

Q3FY23

Q4FY23

FY22

FY23

Net Debt/ EBITDA

Net Working Capital* (Rs. mn)

0.17

0.18

49,219

51,218

53,270

56,290

57,051

-0.02

-0.18

-0.14

Q4 FY22

Q1 FY23

Q2 FY23

Q3 FY23

Q4FY23

*Net working capital includes Inventory, Trade receivables and Trade payables.

Q4 FY22

Q1 FY23

Q2 FY23

Q3 FY23

Q4FY23

5

India Formulations business

Sustained growth momentum driven by focused execution

Highlights for the quarter

Q4 FY23 Revenue Contribution

26%

Q4 FY23 Gr.

YoY

QoQ

10.8%

4.7%

FY23 Gr.

2.0%

Brand building - a key growth driver

Therapy-wise Break-up*

Brand Value (Rs. Mn)*

1000+

500 to 1000

250 to 500

# of Brands

12

23

38

▪

▪

▪

▪

The business grew by 11% YoY, ex-COVID opportunities, the growth was 12% YoY.

Continued to work towards strengthening the presence in focused therapy areas.

Lipaglyn® brand continued to enhance the reach as it expanded the patient base by 37% in FY23.

On the Super Specialty front,

➢ Retained leadership position in Nephrology

segment and

➢ Fastest growing Company in Oncology segment.

*Source: AWACS MAT Mar 23

6

11,640 12,316 12,896 Q4FY22Q3FY23Q4FY23India Formulations Sales (Rs. mn)48,125 49,111 FY22FY23India Formulations Sales (Rs. mn)Anti-infectives13%Cardiac16%Derma5%GI10%Gynae6%Pain8%Respi11%Onco9%Others22%Consumer Wellness

Leveraging strong brand equity to navigate through challenging times

Highlights for the quarter

Q4 FY23 Revenue Contribution

15%

Q4 FY23 Gr.

YoY

QoQ

11.8%

71.7%

FY23 Gr.

12.9%

Key brands continued to hold dominant market share

▪

▪

▪

▪

Consumer sentiments recovered gradually during the quarter. However, urban demand remained better than the rural demand.

Slowdown in rural demand seems to have bottomed out. Expects recovery going forward.

Gross margins improved on the back of price increases taken across portfolio over last few quarters and stabilizing inflation in key inputs except milk.

Despite challenging macro environment, continued to gain market share in key brands viz. Glucon-D, Nycil and EverYuth (Scrub and Peel-Off).

Brand Name

Market Share#

60.1%

35.4%

96.0%

6.2%

41.9%

78.4%

4.5%

Facial Cleansing *

Scrub

Peel Off

#Source: Nielsen and IQVIA MAT March 2023 report * Facial cleansing segment includes Face wash, Scrub and Peel-off.

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6,330 4,120 7,075 Q4FY22Q3FY23Q4FY23Consumer Wellness Sales (Rs. mn)19,788 22,338 FY22FY23Consumer Wellness Sales (Rs. mn)US Formulations business

Delivering sustained sequential growth through the year

Highlights for the quarter

Q4 FY23 Revenue Contribution

46%

$ 189 mn

$ 235 mn

$ 275 mn

$ 780 mn

$ 926 mn

Q4 FY23 Gr.

YoY

QoQ

58.3%

17.0%

FY23 Gr.

28.1%

Continued investment to build the generics pipeline

▪

▪

▪

Received 28 new product approvals (incl. 5 tentative approvals) and launched 8 new products.

New launches for the quarter include Topiramate Extended Release Capsules which was the first generic launch of the product.

Filed 2 ANDAs during the quarter.

78 ANDAs pending approval with the USFDA.

ANDA filings and approvals - Q4 FY23

28

^

ANDA filings and approvals - FY23

63

ANDA filings and approvals - Cumulative

442

364

2

22

Filings

Approvals

Filings

Approvals

Filings

Approvals

^ includes 5 tentative approvals.

8

14,233 19,250 22,525 Q4FY22Q3FY23Q4FY23US Formulations Sales (Rs. mn)58,138 74,451 FY22FY23US Formulations Sales (Rs. mn)Emerging Markets & Europe Formulations business

Base business continued to display robust growth

Highlights for the quarter

Q4 FY23 Revenue Contribution

9%

▪

▪

The business grew by 34% YoY, excluding revenue of COVID related products from the base.

Maintained growth momentum on the back of robust performance across key markets.

Q4 FY23 Gr.

YoY

QoQ

29.9%

16.1%

FY23 Gr.

9.3%

9

3,383 3,783 4,393 Q4FY22Q3FY23Q4FY23EM & EU Formulations Sales (Rs. mn)14,444 15,794 FY22FY23EM & EU Formulations Sales (Rs. mn)Updates on Innovation

NCE: Saroglitazar Magnesium

• The molecule is undergoing Phase II(b) clinical trials for NASH indication for the US market. It received approval from the

regulatory authority of Turkey to conduct clinical trials for this indication.

NCE: ZYIL1 (NLRP3 inhibitor)

• USFDA granted an ODD status to the molecule during the quarter.

Vaccines

▪ On the global development front, submitted the dossier of one of the vaccines to WHO for the purpose of pre-qualification.

▪ This is the second submission to WHO. Rabies vaccine has already received pre-qualification from WHO.

NASH – Non Alcoholic Steatohepatitis, ODD – Orphan Drug Designation, WHO – World Health Organization

10

Zydus at a Glance

~$2.15 bn

Global Revenues1

5th

Largest generic Co. in US in terms of prescription3

7

R&D Centers For NCE, APIs, Gx formulations, Biosimilars and Vaccines

>40% Revenues from India

Geography (Formulations and wellness)

Among Top 3

In 65% of product families marketed in US4

1st

Approved product for NASH in India - (Bilypsa® - Saroglitazar)

$6.4 1st bn

Market Capitalization2

12

Brands among Top 300 in India5

1st 1st

OSD formulation for anemia associated with CKD – OxemiaTM (Desidustat)

36 Mfg. sites having

capabilities across dosage forms

Biosimilars (pipeline & launched) & 7 novel products (pipeline)

23 K

Biosimilars (pipeline & Zydans globally incl. launched) & 7 novel 1400 scientists (R&D) products (pipeline)

23 Biosimilars in portfolio

Biosimilars (pipeline & including 13 launched in launched) & 7 novel India products (pipeline)

1. 2. 3.

In FY23, assuming exchange rate of Rs. 80.4 per USD As on 17th May,2023, exchange rate of Rs. 82 per USD IQVIA MAT March 2023 TRx

4. IQVIA MAT March 2023 TRx 5. As per AWACS MAT March 2023

11

Consolidated Financial Performance (reported)

•

•

•

•

Comments for Q4 FY23

YoY growth in total income from

operations was

led

by

US

formulations business.

YoY improvement in GC margin,

largely

attributable

to

improvement in GC margin across

businesses and lower base on

account

of

COVID

related

inventory provision.

YoY growth in employee benefit

expenses is on account of lower

base created due to gain in

actuarial valuation in Q4 FY22.

YoY growth in other operating

expenses is mainly on account of

lower base.

* Excludes Research related expenses # Profit/ (loss) from discontinued operations in FY23 refers to discontinuation of Nesher and Hercon business while in FY22, it refers to profit on divestment of India-centric Animal Health Business and discontinuation of Nesher and Hercon business.

12

Rs. mnQ4 FY23Q4 FY22YoYgr.Q3FY23QoQgr.FY23FY22YoYgr.Total Income from Ops.50,106 38,056 31.7%42,571 17.7%1,72,374 1,51,099 14.1%Gross Contribution (GC)33,146 23,098 43.5%27,467 20.7%1,09,273 95,647 14.2%Gross Margin %66.2%60.7%64.5%63.4%63.3%Employee benefits expenses *6,507 5,401 20.5%6,282 3.6%24,827 21,974 13.0%R&D expenses3,541 2,697 31.3%3,446 2.8%12,363 10,406 18.8%Other operating expenses9,957 8,405 18.5%9,231 7.9%36,328 31,413 15.6%Net [gain]/loss on foreign currency transactions585 -582 200.5%-1,052 155.6%-2,844 -1,553 -83.1%EBITDA12,556 7,177 75.0%9,560 31.3%38,599 33,407 15.5%EBITDA Margin %25.1%18.9%22.5%22.4%22.1%Other Income378 791 -52.2%385 -1.8%1,866 2,247 -17.0%Finance cost277 385 -28.1%328 -15.5%1,299 1,270 2.3%Depreciation and amortization1,786 1,854 -3.7%1,816 -1.7%7,227 7,130 1.4%PBT before exceptional items10,871 5,729 89.8%7,801 39.4%31,939 27,254 17.2%Exceptional Expenses/ (Incomes)6,013 - - 6,042 -1,127 636.1%Profit before Tax4,858 5,729 -15.2%7,801 -37.7%25,897 28,381 -8.8%Tax expenses1,372 1,092 25.6%1,952 -29.7%5,878 5,117 14.9%Share of profit from JVs118 46 156.5%459 -74.3%946 462 104.8%Profit/(loss) from discontinued ops. #-22 -150 85.3%4 -650.0%-46 22,457 Minority Interest616 559 10.2%83 642.2%1,316 1,310 0.5%Reported Net Profit2,966 3,974 -25.4%6,229 -52.4%19,603 44,873 -56.3%Details of Exchange Rate Fluctuations

13

Rs. mnQ4 FY23Q4 FY22YoYgr. %FY23FY22YoYgr. %A. On operating transactions (above EBITDA line)590 -516 214.2%-3,049 -1,468 -107.7%a. Included in COGS5 66 -93%-205 85 -341.1%b. Part of other operating expenses (shown separately)585 -582 -2,844 -1,553 B. On other income-5 -200 97.5%-258 -646 60.1%C. On foreign currency borrowings (part of finance cost)- 71 -100.0%1 71 -98.6%Total Exchange Rate Fluctuations ('+' = loss, '-' = gain)585 -645 190.6%-3,306 -2,043 -61.8%Thank you

For any queries, please contact Arvind Bothra Arvind.Bothra@zyduslife.com +91-22-62711905

For more information, please visit: www.zyduslife.com

www.linkedin.com/company/zyduslife

Registered Office:

Zydus Corporate Park, Scheme No. 63, Survey No. 536, Khoraj (Gandhinagar), Nr. Vaishnodevi Circle, Sarkhej-Gandhinagar Highway, Ahmedabad – 382 481 Gujarat, India