Indegene Ltd

Dear Stakeholders,

I am delighted to present our first annual report following our public listing, a milestone that coincides with Indegene completing 25 years of redefining the healthcare paradigm, globally. 25 years in the lifetime of this company have anchored aspirations, determination, experiences and journeys, that all of us at Indegene deeply cherish. At 25, and now as a listed entity, we are very energized, much the way we were when we had just about started, to pursue our continuing journey of enabling future-ready healthcare, globally.

Deeply grateful for your overwhelming trust and support to Indegene, this very much inspires us and further strengthens our resolve. I extend our deepest gratitude to all our stakeholders, those who have been with us for long, and those who have joined us recently. We are delighted to have you partner with us in our journey ahead and we stay very committed to delivering long-term value in our continuing pursuit of excellence.

Differentiating with excellence

Indegene is unique, operating at the intersection of healthcare knowledge and technology. We started our journey with the core belief that by bringing these together, we can address and meaningfully solve complex problems of the industry. This belief has been our guiding star in enabling the healthcare industry be future-ready in delivering better outcomes for patients around the world.

Today, we are the preferred digital-first commercialization partner to global life sciences companies, excelling in managing the essential processes that bring a drug from the labs to the market. While these processes were primarily anchored in-house within life sciences companies, traditional models and lack of technological adoption made them time-, resource- and cost-intensive. Blending digital-first and AI-driven approaches with our domain expertise, we are re-imaging for the industry these processes - delivering effectiveness, improving outcomes, while driving operational efficiencies, and reducing costs.

We deliver solutions through four dedicated segments: Enterprise Commercial Solutions (ECS) and Omnichannel Activation Solutions catering to pharmaceutical sales and marketing functions, Enterprise Medical Solutions (EMS) for medical affairs, safety, and regulatory functions, and the Others segment for clinical operations.

At the heart of what we do is our multi-functional, multigeographic team that seamlessly blends multiple skills, even as some of these skills are evolving. Our team comprises many with life sciences background that includes doctors, PhDs, pharmacologists, life sciences graduates; who seamlessly collaborate with data scientists/engineers, software engineers, omnichannel/brand strategists, and creative directors. The impact of this confluence of disparate skills and collaborative models has been profound; resulting in differentiated, value- added solutions for our customers worldwide.

Our pursuit over so many years has earned us recognition and trust of the industry, globally. We operate in highly regulated geographies, providing a broad range of solutions for our customers.

66.0% of our revenues in FY 2023-24 came from the US, and 30.7% from the European markets, these are in line with the past trends. Our clientele, that includes the top 20 global pharmaceutical companies most of whom are on the Fortune 500 list, contribute to 72.1% of our revenues.

Track record of strong performance

Our unique, differentiated capabilities are backed by our consistent track record in many years. Over the past decade (FY 2014-15 to 2023-24), our revenues have expanded at a CAGR of 31.1%, and adjusted EBITDA at 41.2%. As we have grown our business, at our core, we have brought the culture construct 'entrepreneurial spirit with prudence' and strong corporate governance practices, ensuring high returns through strategic investments. This is reflected in ROCE of 34.6% and an ROE of 36.1% over the 10-year period.

FY 2023-24 saw us growing at 12.3% to Rs.25,896 million. The established business segments of ECS and EMS grew 11% to Rs.21,294 million, constituting 82.2% of total revenues. The nascent businesses of Omnichannel Activations and Others grew by 18% to Rs.4,602 million. The omnichannel business was partly impacted by the tough external environment in the emerging biotech customer segment, resulting in degrowth. This was offset by the inorganic growth coming from CultHealth, which we acquired in the H2 FY 2022-23.

Our adjusted EBITDA grew by 28.1% to Rs.5,817 million. Efforts to drive operational efficiencies through productivity measures like automation and process improvements, especially in the established ECS and EMS businesses, improved margins. Adjusted EBITDA margin was up by 280 basis points to 22.5%. PAT was up 26.5% to Rs.3,367 million with a margin of 13.0%, reflecting our focus on cost optimization and value- driven serviceability. We see the potential to further improve PAT as we intend to utilize the IPO proceeds to pay off debt which stood at Rs.3,934 million as on 31 March 2024. This will make us a debt-free entity, eliminating interest costs.

Our balance sheet remains strong with a liquidity of Rs.9,851 million as on 31 March 2024, which includes investments in liquid instruments of Rs.7,965 million and bank balances of Rs.1,886 million. This provides us with ample liquidity, which we will judiciously deploy for strategic acquisitions and create more value for shareholders. We have a successful track record of acquiring the right companies at the right prices and integrating them to expand our customer and solution footprint, which we will continue to pursue.

Staring at decadal growth opportunity

As we enter a new phase in our journey, we are excited about the immense opportunities ahead. The global life sciences industry is valued over US$ 1.8 trillion and the operational spending in our addressable market is around US$ 156 billion.

Sales and marketing, which is our major focus area, is the largest spending area for life sciences companies and is growing at 6-7% annually. Outsourcing is growing at a faster rate, around 9% to 14%, depending on the segment. Apart from this, the industry is rapidly transitioning from traditional, more people-oriented to digital, AI and automation-driven models. The shift to this model will continue to play out given the mounting pressures of high R&D spend and stretched timelines, compliance and complexities of skill sets needed in a rapidly evolving world. Companies will increasingly adopt digital and AI technologies to reduce costs, accelerate trials and regulatory submissions alongside driving better physician and patient engagements. These developments expand our addressable market.

Path to accelerated growth

With a strong competitive position in this large industry, a robust client base and deeply differentiated capabilities, Indegene is well-positioned for growth. We look to leveraging the trend of digitization in the life sciences industry.

Deepening customer engagement remains our main driver for growth, this is a core focus area. Life sciences companies typically have multiple business functions, and our wide portfolio of solutions positions us to cater to each of them. Through our 'land and expand strategy', we aim to expand the range of solutions/services across clients' commercialization processes through up-selling and cross-selling.

Indegene has earned and sustained trust among our customers worldwide, basis our talent pool, domain knowledge, technology, and solutions expertise that we have successfully and continually leveraged for our customers.

We look to strengthening this further and expand our client base to other large and mid-tier specialty biopharmaceutical companies. Alongside, we will continue to strengthen our capabilities, including scaling operational efficiencies and investing in manpower and technology competencies, especially around integrating Gen-AI in solutions. We will also seek to explore value-accretive acquisitions to expand operations inorganically and widen our range of solutions.

Closing remarks

I once again express my deepest gratitude to all our stakeholders, who have supported us through successes and setbacks, in our journey all these years.

To our valued customers and partners, we thank them for entrusting us with critical challenges and opportunities. Each of our enduring partnerships has been instrumental in shaping our solutions and driving positive impacts.

To our independent directors, heartfelt gratitude for being with us all this while, and bringing very valuable experiences and invaluable guidance, we deeply appreciate. To our leadership and management team that has seen and shared this tenured journey, it is wonderful being together.

To our dedicated and passionate team, our greatest strength,

I thank each one of them, and their partners/families/loved ones, for staying the course, pursuing excellence, surmounting challenges, and crafting an inspiring story that uniquely defines Indegene.

Today, we have the energies and excitement of a greyed startup, strong balance sheet and a very strong platform on which we will build the next many layers of our company, together!

I look to the future with hope and optimism. With the belief that there is much to be learned and unlocked as enduring values for an industry that is committed to impacting and improving lives everywhere. To all of them and all of you, it is Indegene's commitment and purpose to uniquely and significantly enable future-ready healthcare.

Sincerely,

Mr. Manish Gupta

Chairman and Chief Executive Officer.