About Sun Pharmaceuticals Industries Ltd

Sun Pharmaceutical Industries Ltd. is the fifth largest speciality generic pharmaceutical company in the world. The company manufactures and markets a large basket of pharmaceutical formulations covering a broad spectrum of chronic and acute therapies. It includes generics, branded generics, complex or difficult to make technology intensive products, over-the-counter (OTC) products, anti-retrovirals (ARVs), Active Pharmaceutical Ingredients (APIs) and intermediates. The product portfolio of over 2000 high quality molecules covers multiple dosage forms, including tablets, capsules, injectables, inhalers, ointments, creams and liquids. The products cater to a vast range of therapeutic segments covering psychiatry, anti-infectives, neurology, cardiology, orthopaedic, diabetology, gastroenterology, ophthalmology, nephrology, urology, dermatology, gynaecology, respiratory, oncology, dental and nutritionals. The company has global presence with 41 manufacturing facilities across the world. India and the US are two predominant markets, accounting for nearly 70% of the company's revenue. The company has a robust product pipeline and established presence in Europe and high-growth emerging markets like Russia, Romania, South Africa, Brazil and Mexico. The company has entered into a joint-venture agreement with MSD (Merck) to develop and bring differentiated branded generics to emerging markets. Sun Pharmaceutical Industries invests around 7-8% of its global revenue each year in R&D. The R&D capabilities span the development of differentiated products such as liposomal products, inhalers, lyophilized injections and nasal sprays, besides controlled release dosage forms. Sun Pharmaceutical Industries Ltd was incorporated in the year 1983. The company began operations in Kolkata with just 5 products to treat psychiatry ailments. They set up a compact manufacturing facility for tablets/capsules at Vapi. Sales were initially limited to two states in Eastern India. In the year 1986, the company set up an administrative office in Mumbai. They extended the customer coverage to select cities in Western India. In the year 1987, they rolled out their marketing operations nation-wide. In the year 1988, the company launched Monotrate and Angizem products. In the year 1989, they introduced Products used in gastroenterology. They moved their corporate office to Baroda. Also, they began exporting their products to neighboring countries. In the year 1998, the company established their first research center, SPARC and this created the base for strong product and process development that enabled growth in the subsequent years. Also, they began office in Moscow. In the year 1994, the company was listed on the main stock exchanges in India. They started production in a dosage form plant at Silvassa. Also, they completed the major expansion at Vapi plant. In the year 1995, the company's first API plant at Panoli started production. Also, a new division, Azura, was begun for cardiology products. Inca, a new division to market critical care medication to intensive care units began operations. They strengthened the international marketing with offices in Ukraine and Belarus. In the year 1996, the company acquired an API plant at Ahmednagar from the multinational Knoll Pharmaceutical, and expanded and substantially upgraded for regulated markets, with capacity addition over the years across differentiated API lines such as anticancers and peptides. Also, the company acquired equity stake in Gujarat Lyka Organics Ltd., a manufacturer of Cephalexin Active with a USFDA approval for the intermediate, 7ADCA. In the year 1997, the company's headquarters was shifted to Mumbai, India's commercial capital. Also, they began the first of their international acquisitions with an initial $7.5 million investment in Caraco, Detroit. Also, they took equity stake in MJ Pharma, a manufacturer of several dosage form lines with UK MHRA approval for Cephalexin capsules. The company acquired TDPL with an extensive product offering and its portfolio streamlined. In the year 1998, the company acquired a basket of products, including several respiratory/asthma brands acquired from Natco Pharma. Their new formulation plant at Silvassa commenced operations. In the year 2001, the company built a new formulation plant in Dadra. Also, the erstwhile TDPL division was renamed Spectra. A new division, Arian, targeting cardiologists/physicians and diabetologists, was launched. In the year 2004, the company acquired common stock and options from 2 large shareholders of Caraco, increasing stake to over 60% from 44% at a total outlay of about $42 million. The upgraded and expanded formulation site in Halol, India (the erstwhile MJ Pharma site) received approval from USFDA, UK MHRA, South African MCC, Brazilian ANVISA and Columbian INVIMA. During the year, the company completed the construction at a formulation manufacturing site at Jammu. They commissioned their first joint venture manufacturing unit, in Dhaka, Bangladesh. Also, two of their API factories received USFDA approval, taking the total number of US FDA approved sites to three. The company acquired a Cephalosporin Active manufacturer, Phlox Pharma, with European approval for cefuroxime axetil amorphous. In December 2004, a research centre spread over 16 acres was inaugurated by the President of India, with special lab space for drug discovery and innovation. In the year 2005, the company bought a plant in Bryan, Ohio, US and the business of ICN, Hungary from Valeant Pharma. In December 2005, they acquired the intellectual property and assets of Able Labs from the US District Bankruptcy court in New Jersey. In the year 2007, the company de-merged the innovative research and business into a new company, SPARC Ltd. SPARC Ltd was listed on the stock exchanges in India, the first pure research company to be so listed. In May 2007, the company along with their subsidiaries, signed definitive agreements to acquire Taro Pharmaceutical Industries Ltd., a multinational generic manufacturer with established subsidiaries, manufacturing and products across the US, Israel, Canada for $454 million. In November 2008, the company along with their subsidiaries acquired 100% ownership of Chattem Chemicals, Inc., a narcotic raw material importer and manufacturer of controlled substances with an approved API facility in Tennessee. This offers vertical integration for its controlled substance dosage form business in the US. In September 2010, the company acquired Taro Pharmaceuticals. This acquisition doubled the size of their US business and brought them a range of generics including a strong line of dermatologicals. In April 2011, MSD in India and Sun Pharmaceutical Industries Ltd announced formation of an India-specific strategic partnership agreement under which Sun Pharma will have the right to market, promote and distribute MSD's diabetes products, sitagliptin and sitagliptin plus metformin, under different brand names in India. In June 14, 2011, Caraco Pharmaceutical Laboratories Ltd (Caroco) merged with a subsidiary of the company. Thus, Caraco became a wholly owned subsidiary of the company. In 2012, Sun Pharma bagged USFDA approval for its AND Application for generic Zyprexa. The company also acquired URL generic business from Takeda during the year under review. In 2013, the company announced US FDA approval for generic Cymbalta. The company and Intrexon formed Joint Venture to Develop New Class of Therapeutics for Ocular Diseases. The Company announces USFDA approval for generic Prevacid, generic DoxilAr and generic DepoAr-Testosterone Injection. The company also Announces 1:1 Bonus during the year. The company also announces Tentative USFDA approval for generic Januvia & Glumetza. In 2014, the company announced US FDA approval for generic Temodar. The company acquires Pharmalucence during the year. The company and Merck & Co. Inc. enter into Licensing Agreement for Tildrakizumab during the year under review. The Board of Directors of the Company at its Meeting held on April 06, 2014 has approved the scheme of arrangement between Ranbaxy Laboratories Limited and the Company under the provisions of the sections 391 to 394 and other applicable provisions of the Companies Act, 1956 and corresponding provisions of the Companies Act, 2013 subject to receipt of necessary approvals, consents and filings. In 2015, the company receives US FTC clearance for Ranbaxy acquisition. The company and AstraZeneca enter into distribution agreement for ticagrelor in India during the year. SPARC Licenses Xelpros (Latanoprost BAK-free) to Sun Pharma. During the year, Hon'ble High Court of Gujarat, at Ahmedabad has approved the Scheme of Amalgamation of Sun Pharma Global Inc. (SPGI), wholly-owned subsidiary of the Company. The company also announces US FDA Approval for Ximino TM. The company also announces another successful completion of Opiates business acquisition in Australia and also acquires InSite Vision Incorporated. The company announces Absorica patent litigation settlement during the year under review. On 10 December 2015, Sun Pharmaceutical Industries announced that it has entered into a tripartite research and option agreement with Israel-based Weizmann Institute of Science and Spain's Health Research Institute of Santiago de Compostela (IDIS) to develop breakthrough products for the treatment of neurological diseases like brain stroke as well as glioblastoma, a lethal brain cancer. On 14 December 2015, Sun Pharmaceutical Industries announced that as a part of its manufacturing consolidation in the US, one of its wholly owned subsidiaries has entered into an agreement with Nostrum Laboratories Inc. (Nostrum) for the divestment of the Bryan (Ohio) unit in the US. As a part of the agreement, the Sun Pharma subsidiary has divested this unit as a going concern along with the employees and related products to Nostrum. On 19 December 2015, Sun Pharmaceutical Industries announced that it has received a Warning Letter from the USFDA as a result of the September 2014 inspection for its facility located at Halol, Gujarat in India. Post the September 2014 inspection, the US FDA has withheld future product approvals from the Halol facility. Sun Pharma said that the company expects to request a re-inspection by USFDA upon completion of its remediation commitments. Sun Pharma also said at that time that the Halol facility will continue to supply important drug products to meet its obligations to its customers and the patients who use the drugs in the United States and around the world. On 23 March 2016, Sun Pharma and AstraZeneca Pharma India Limited announced a partnership for the distribution of dapagliflozin, an innovative Type 2 diabetes medicine, in India. Dapagliflozin is AstraZeneca India's leading diabetes medicine. Under the agreement, Sun Pharma will promote and distribute dapagliflozin under the brand name Oxra. AstraZeneca India markets dapagliflozin under the brand name Forxiga and under the terms of the agreement, both companies will promote, market and distribute dapagliflozin in India under different brand names. AstraZeneca will retain the intellectual property rights to dapagliflozin. Sun Pharma will also gain the rights to promote and distribute the combination of dapagliflozin with metformin under the brand name Oxramet after requisite regulatory approval. On 29 March 2016, Sun Pharma announced the acquisition of 14 established prescription brands from Novartis AG and Novartis Pharma AG in Japan. According to the agreements entered into between the parties, a wholly-owned subsidiary of Sun Pharma will acquire the portfolio consisting of 14 established prescription brands from Novartis for a cash consideration of US$ 293 million. These brands have combined annualized revenues of approximately US$ 160 million and address medical conditions across several therapeutic areas. Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorizations to Sun Pharma's subsidiary. The acquired brands will be marketed by a reliable and established local marketing partner under the Sun Pharma label. The local marketing partner will also be responsible for distribution of the brands. On 4 May 2016, Sun Pharma and International Centre for Genetic Engineering and Biotechnology (ICGEB) signed an agreement to develop a novel botanical drug for treatment of dengue. Through this agreement Sun Pharma will follow up on earlier pre-clinical collaboration between ICGEB and erstwhile Ranbaxy Laboratories. Sun Pharma will develop Cipa, a botanical drug following a drug registration process similar to a new chemical entity, consisting of all required in-vitro, in-vivo, pre-clinical and clinical studies meeting all regulatory standards of India and other regulatory agencies worldwide. A botanical drug is a plant-derived medicinal product that is intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in humans. On 4 June 2016, Sun Pharma announced that as a part of its manufacturing consolidation in the US, one of its wholly owned subsidiaries has entered into an agreement with Frontida BioPharm, Inc. (Frontida) for divestment of its two oral solid dosage manufacturing facilities located at Philadelphia, PA, and Aurora, IL, both in the US, along with 15 related pharmaceutical products. In connection with the transaction, Frontida has agreed to continue manufacturing certain products for Sun Pharma at these facilities on a contract basis for a predetermined period. The Board of Directors of Sun Pharma at its meeting held on 23 June 2016 approved buyback of fully paid up equity shares of the company through the tender offer route at Rs 900 per share. The purpose of the buyback is to return surplus funds to the equity shareholders and thereby, enhancing the overall returns to shareholders. On 18 July 2016, Sun Pharma and Sun Pharma Advanced Research Company Ltd. (SPARC) announced a licensing arrangement for SPARC's ELEPSIA XR (Levetiracetam Extended Release tablets). As per the agreement, SPARC will license ELEPSIA to a wholly-owned subsidiary of Sun Pharma for the US market. SPARC will receive an up-front payment of US$10 million from Sun Pharma. It is also eligible for certain additional milestone payments and defined royalties linked to any future sales of ELEPSIA XR. On 27 July 2016, Sun Pharma and Almirall announced a licensing agreement on the development and commercialization of tildrakizumab for psoriasis in Europe. Under terms of the license agreement, Almirall will pay Sun Pharma an initial upfront payment of US $50 million. Sun Pharma will be eligible to receive development and regulatory milestone payments and, additionally, sales milestone payments and royalties on net sales. Almirall will be able to lead European studies, and participate in larger global clinical studies for psoriasis indication subject to the terms of the Sun Pharma - Merck agreements, as well as certain cost sharing agreements. Sun Pharma will continue to lead development of tildrakizumab for other indications, where Almirall will have right of first negotiation for certain indications in Europe. On 6 September 2016, Sun Pharma announced that it has signed a strategic distribution alliance with Mitsubishi Tanabe Pharma Corporation, Japan for 14 prescription brands. Under this alliance, Mitsubishi Tanabe Pharma Corporation will market and distribute all the 14 brands as well as provide information on their proper use to healthcare professionals. On 19 October 2016, Sun Pharma and International Centre for Genetic Engineering and Biotechnology (ICGEB) announced their new collaboration for development of a dengue vaccine, targeted against all the four serotypes of Dengue virus that cause disease in humans. According to the agreement, Sun Pharma will fund and support further development of the vaccine candidate and existing ICGEB Know-How and Patents. ICGEB will grant Sun Pharma exclusive rights and licenses for development and commercialization of this vaccine globally. ICGEB will receive pre-defined royalty and milestone payments. On 26 October 2016, Sun Pharmaceutical Industries announced the execution of definitive agreements by its wholly owned subsidiary for the acquisition of 100% of Ocular Technologies, Sarl (OTS), a portfolio company of Auven Therapeutics (Auven), an international private equity company focused on accelerated development of breakthrough therapeutic drugs. OTS owns exclusive, worldwide rights to Seciera (cyclosporine A, 0.09% ophthalmic solution). Sun Pharma will pay Auven US$ 40 million upfront, plus contingent development milestones and sales milestones as well as tiered royalty on sales of Seciera as consideration for this acquisition.On 23 November 2016, Sun Pharma announced the execution of definitive agreements by its wholly owned subsidiary for the acquisition of 85.1% ofJSC Biosintez, a Russian pharmaceutical company engaged in manufacture and marketing of pharmaceutical products in Russia and CIS region. The equity consideration for the 85.1% stake is US$ 24 million. Sun Pharma would also assume a debt of approximately US$ 36 million as part of this transaction. Biosintez is a Russian pharmaceutical company focusing on the hospital segment with annual revenues of approximately US$ 52 million for 2015. It has a manufacturing facility in Penza region with capabilities to manufacture a wide variety of dosage forms including pharmaceuticals for injections, blood substitutes, blood preservatives, ampoules, tablets, ointment, creams, gels, suppositories, APIs, etc. On 28 November 2016, Sun Pharma announced the launch of a branded ophthalmic product BromSite 0.075% in the US market. It was the first branded product launched by the company in the USA following its focus on Specialty Business. On 12 December 2016, Sun Pharma and Israel-based Moebius Medical announced that they have entered into an exclusive worldwide licensing deal to further develop MM-II, a novel pharmaceutical candidate for the treatment of pain in osteoarthritis. According to the agreement, Sun Pharma will fund further development of Moebius Medical's lead product, MM-II, and undertake its global commercialization. Moebius Medical will conduct requisite pre-clinical studies, and will assume responsibility for product development and manufacturing through the end of Phase-II studies. Sun Pharma will assume responsibility for further clinical studies, regulatory submissions and product commercialization. Moebius Medical will receive an upfront payment, development-based and sales-based milestone payments, and tiered royalties on sales from Sun Pharma. On 22 December 2016, Sun Pharma announced its plans to acquire a branded oncology product Odomzo from Novartis. The agreement was signed for an upfront payment of US$ 175 million and additional milestone payments. Odomzo (Sonidegib) was approved by the USFDA in July 2015. Odomzo is a hedgehog pathway inhibitor indicated for the treatment of adult patients with locally advanced basal cell carcinoma (laBCC) that has recurred following surgery or radiation therapy, or those who are not candidates for surgery or radiation therapy. On 4 January 2017, Sun Pharma announced successful Phase 3 confirmatory clinical trial results for Seciera for the treatment of dry eye disease. Seciera is being developed by Ocular Technologies, a company acquired by Sun Pharma. Following this acquisition, Sun Pharma owns exclusive, worldwide rights to Seciera and is developing it to commercialize for global markets including US, Europe, and Japan, as well as several emerging markets. On 14 March 2017, Sun Pharmaceutical Industries announced that USFDA will lift the Import Alert imposed on the company's Mohali, Punjab manufacturing facility and remove the facility from the Official Action Initiated (OAI) status. This proposed action will clear the path for Sun Pharma to supply approved products from the Mohali facility to the US market, subject to normal USFDA regulatory requirements. The Mohali facility was inherited by Sun Pharma as part of its acquisition of Ranbaxy Laboratories in 2015. The USFDA had taken action against the Mohali facility in 2013 when it ordered the facility to be fully subject to Ranbaxy's Consent Decree of Permanent Injunction. Certain conditions of the consent decree will continue to be applicable to the Mohali facility. On 27 June 2017, Sun Pharmaceutical Industries and National Institute of Virology (NIV), Pune, an institution of the Indian Council of Medical Research, Department of Health Research, Ministry of Health and Family Welfare, New Delhi announced that they have signed an agreement for testing phytopharmaceutical, biologic and chemical entities developed by Sun Pharma against Zika, Chikungunya and Dengue viruses. Sun Pharma will provide drug molecules to NIV for testing against Zika, Chikungunya and Dengue in model systems. Candidate molecules with encouraging data will then be taken forward for commercial development. On 4 July 2017, Sun Pharmaceutical Industries and Samsung BioLogics announced a strategic long-term manufacturing agreement for Tildrakizumab, an investigational IL-23p19 inhibitor being evaluated for the treatment of moderate to severe plaque psoriasis. According to the agreement, Sun Pharma has appointed Samsung BioLogics to manufacture Tildrakizumab. The approximate value of the contract will be US$ 55.5 million. The regulatory filings associated with tildrakizumab have been accepted for review by the U.S. Food and Drug Administration and the European Medicines Agency (EMA). On 16 January 2018, Sun Pharmaceutical Industries announced that its wholly owned subsidiaries have reached an agreement with Ironwood Pharmaceuticals, Inc. and Allergan plc to resolve the patent litigation regarding submission of an Abbreviated New Drug Application (ANDA) for a generic version of Linzess (Linaclotide capsules) in the US. Pursuant to the terms of the settlement, Ironwood Pharmaceuticals and Allergan will grant, the wholly owned subsidiaries of Sun Pharma, a license to market a generic version of Linzess in the United States beginning 1 February 2031 (subject to USFDA approval) or earlier under certain circumstances.

Sun Pharmaceuticals Industries Ltd Chairman Speech

Dilip Shanghvi, Managing Director

Dear Shareholders,

The global pharmaceutical industry is at crossroads. The type of drugs being developed by the industry and the role played by technology are being juxtaposed against the value that healthcare delivers to patients. On one hand, the industry is developing new generation specialty drugs in gene therapy, monoclonal anti-bodies and immunotherapy categories, which have improved medical outcomes for patients; but on the other hand, the industry is facing increasing resistance from governments and payors over escalating drug prices, which impacts healthcare budgets. The need of the hour is for innovation and affordability to co-exist for the long-term benefit of all stakeholders.

The scenario for the generics industry is markedly different from its much larger branded counterpart. Generics pricing in the US, the largest and most important of all generics markets, has been under severe pressure over the last three years. The business profitability in the US generics market has suffered significantly over this period. Although there are early signs of price stabilisation for some products, the overall US generics pricing continues to be competitive.

The industry has started responding to these changes through a combination of multiple initiatives. These include a focus on developing innovative and differentiated products, withdrawal of non-remunerative products and persistent emphasis on cost control.

With business becoming more challenging, it has become imperative for companies to be more innovative and identify new engines of growth. Sun Pharma's significant investments in building a global specialty business is an important step in this direction. This initiative will enable us to build an additional engine of growth as well as move up the pharmaceutical value chain over the long term.

Our unwavering focus on cost control continues, with these efforts spread across generic R&D projects, rationalisation of manufacturing footprint and other areas. These steps will release resources which can be deployed in the specialty business.

FY19 highlights

We are back on the growth path with our FY19 revenues growing by 10% to '287 Billion. We have recorded steady growth in all the markets where we operate.

Operational performance

Revenues in the US increased 22% to '107 Billion and accounted for 37% of our consolidated revenues for FY19. The key growth drivers include increase in generics sales, incremental contribution from specialty product launches and a favourable foreign exchange rate. Our subsidiary,

Taro recorded a marginal growth in overall revenues to US$ 670 Million for the year. This was mainly the result of more intense competition among manufacturers, new entrants to the market, buying consortium pressures and a higher abbreviated new drug application (ANDA) approval rate from the United States Food and Drug Administration (USFDA).

We recorded 8% decline in our India formulations business, however, our adjusted growth, excluding one-offs, was 5%.

We grew by 11% in emerging markets for the year.

This growth was broad based across various markets.

Our sales in the rest of world (RoW) markets grew by 16% for the year, driven by increased sales in some Western European markets and partly driven by the Pola Pharma Inc. (Pola Pharma) acquisition in Japan.

R&D

R&D is the lifeline of our business as it enables us to develop and launch differentiated generics as well as innovative specialty products. It is a key determinant of our future growth and profitability. Our efforts to build a global specialty pipeline mandates that we keep investing in R&D.

Our R&D investments for the year were ~'20 Billion, targeted mainly at developing complex generics and specialty products. Given the intensely competitive nature of the US generics market, we continue to be disciplined in identifying future R&D projects for the generics market. Investments for developing the long-term specialty pipeline are expected to continue. We are also investing in developing specific products for emerging markets and other non-US developed markets.

Progress on specialty initiatives

We have further progressed in our global specialty initiatives, which commenced a few years ago. We view the specialty business as an additional engine of sustainable growth and cash flows over the long term. It is also an initiative to move up the pharmaceutical value chain and bring in more innovation to our business. We have allocated significant resources over the past few years in building this business for acquiring specialty products, funding their clinical trials and establishing the requisite front-end capabilities. We have now entered the commercialisation phase for most of our specialty products.

The focus areas for our specialty portfolio include segments like dermatology, ophthalmology and oncology.

Specialty products-Approvals and launches in FY19

We crossed many important milestones for our specialty business in FY19 with USFDA approvals for four specialty products and commercialisation of three specialty products. Some of the key highlights for the year were:

• We launched ILUMYA™ (tildrakizumab-asmn) 100 mg/mL in the US for treating moderate-to-severe psoriasis in October 2018. We have received a good initial response for the product and we expect ramp-up in ILUMYA™ sales in the US over the next few years. We have also commenced a direct-to-consumer advertising initiative for ILUMYA™ in the US.

• Our European partner, Almirall, received approval for tildrakizumab from the European Commission (EC) under the ILUMETRI™ brand name. Almirall has commenced commercialisation of ILUMETRI™ in Europe in a phased manner across different markets.

• Sun Pharma also received approval from the Australian Therapeutic Goods Administration (TGA) for ILUMYA™ during the year. The product has already been commercialised in Australia.

• During the year we received USFDA approvals for CEQUA™ (cyclosporine ophthalmic solution 0.09%). CEQUA^TM increases tear production in patients with dry eyes. It is the first and only approved dry eye treatment to combine cyclosporine A with nanomicellar technology. CEQUA™ will be commercialised in the US in FY20.

• In May 2018, Sun Pharma received USFDA approval for YONSA (abiraterone acetate), a novel formulation in combination with methylprednisolone to treat patients with metastatic castration-resistant prostate cancer (mCRPC). This approval has further strengthened Sun Pharma's oncology portfolio in the US. The product was commercialised in the US in the first quarter of FY19.

• During the year, Sun Pharma also received USFDA approval for its New Drug Application (NDA) of XELPROS™ (latanoprost ophthalmic emulsion 0.005%) used for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. XELPROS™ is the first and only form of latanoprost that is not formulated with benzalkonium chloride (BAK), a commonly used preservative in topical ocular preparations. XELPROS™ was launched in the US in January 2019.

• In July 2018, Sun Pharma announced the USFDA approval for INFUGEM™ (gemcitabine in 0.9% sodium chloride injection), for intravenous use in a ready-to-administer (RTA) bag. INFUGEM™ uses a proprietary technology, which allows cytotoxic oncology products to be pre-mixed in a sterile environment and supplied to the prescribers in RTA infusion bags. These RTA bags will provide greater safety, by preventing problems of over-dosing or under-dosing and eliminating contamination risk. INFUGEM™ was commercialised in the US in April 2019.

• In August 2018, Sun Pharma launched KAPSPARGO SPRINKLE™ (metoprolol succinate) extended-release sprinkle formulation in the US. The product will help treat hypertension, angina pectoris (chest pain) and heart failure. These extended-release coated pellets can be sprinkled over soft food or administered via a nasogastric tube to facilitate long-term, once-daily administration for patients who experience difficulty while swallowing.

• We have also initiated investments in the development of new indications for ILUMYA™. Although the clinical trials for these new indications will require upfront investments, a successful outcome of the trials will significantly expand the addressable market for ILUMYA™ globally.

Enhancing presence in Japan

In January 2019, we announced the closure of the acquisition of Pola Pharma, a Japanese pharmaceutical company.

Pola Pharma's portfolio primarily comprises dermatology products and it also has two manufacturing facilities in Japan with capabilities to manufacture topical products and injectables. This acquisition strengthens Sun Pharma's presence in Japan and accelerates its access to the Japanese dermatology market.

Regulatory compliance in pharmaceutical manufacturing

Regulatory standards for pharmaceutical facilities have been undergoing constant upgradation over the past many years, with regulatory agencies demanding the highest quality products. To adhere to these stringent standards, pharmaceutical companies need to have an unwavering focus on 24x7 compliance, which, in turn, raises compliance costs. Ensuring that each manufacturing facility remains compliant has become a key priority for pharmaceutical companies worldwide.

During the year, many of our facilities underwent successful audits by multiple regulatory agencies, including the USFDA.

Our Halol facility, which was impacted by cGMP deviations in FY15, was cleared by the USFDA in June 2018. With this clearance, new approvals from this facility for the US market have started coming through gradually.

Restructuring and rationalisation

We also continue to focus on optimising our costs, given the tough phase that the global generics industry is passing through. We strive to optimally utilise our resources with greater involvement of people, to make the Company more efficient.

We continue to emphasise on optimising our manufacturing footprint, to strike a pragmatic balance between current costs and future capacity requirements. We are constantly evaluating our generics R&D investments, to ensure a reasonable return on investment.

Overall outlook

Our consistent focus is on growing each of our businesses faster than the market in which they operate. Our global specialty initiatives will supplement this objective as an additional growth engine.

Although the US generics industry continues to face pricing pressure, the industry has started responding to these challenges by rationalising product portfolios and discontinuing non-remunerative products. These steps have been taken to ensure that generics products are able to generate reasonable returns to manufacturers.

In US, generics account for more than 80% of overall pharmaceutical volumes. In Western Europe, generics account for a significant portion of volumes as well. In Japan, the government has been encouraging higher generics penetration to bring down healthcare costs. All emerging markets rely on branded generics and/or pure generics to service their healthcare needs, given the lower purchasing power of their population. Hence, generics will continue to be an integral part of the solution to control global healthcare costs and has an important role to play in overall healthcare management.

Sun Pharma continues to invest in the generics business, with a focus on developing differentiated complex generics and building a product pipeline across markets. Our strong positioning in the global generics space will ensure that we remain an important player in the generics industry.

We are gradually ramping up our global specialty business. One of key ailments that we are targeting is psoriasis. As per a EvaluatePharma report, the size of the US psoriasis market was estimated at ~US$ 10 Billion in 2018 and is expected to grow at 9% CAGR till 2024. The report also estimates the global market for psoriasis at ~US$ 15 Billion in 2018, which is likely to grow at 9% CAGR to US$ 24.6 Billion by 2024.

We have started commercialising ILUMYA™, useful for treating moderate-to-severe plaque psoriasis in various markets globally. It was launched in the US in October 2018 and in Australia in December 2018. Our partner in Europe has commenced a phased launch of the product, starting with Germany, under the ILUMETRI™ brand name.

The product has received a good response from doctors in these markets. We continue to evaluate other potential markets for commercialising ILUMYA™.

We recently announced long-term clinical insights for ILUMYA™ at the 2019 American Academy of Dermatology conference. The data presented showed sustained skin clearance in some patients living with moderate-to-severe plaque psoriasis after three years of ongoing treatment with ILUMYA™. The product was also well tolerated with low rates of adverse events. We believe that these positive data points will enable the product to do well in the large US$ 15 Billion global psoriasis market.

Our initiatives in the specialty ophthalmology segment are also gaining momentum. Our dry eye specialty product, CEQUA^TM, is expected to be commercialised in the US in FY20. We have recently launched XELPROS™ (latanoprost ophthalmic emulsion) 0.005% in the US for the reduction of elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension.

Sun Pharma will continue to invest in branding and promotion of its various specialty products. R&D investments for funding clinical trials of some of the specialty products are also likely to continue in future.

For FY20, we expect our consolidated revenues to grow by low-to-mid teens, while R&D investments are estimated at ~8-9% of sales.

Our talented team of employees will be the key driver of all the above initiatives. We are grateful to our Board of Directors for their guidance and support.

We are thankful for your support as a shareholder and we hope that you will continue to repose your confidence in us in future as well.

Warm regards,

Dilip Shanghvi

Managing Director.

Sun Pharmaceuticals Industries Ltd Company History

Sun Pharmaceutical Industries Ltd. is the fifth largest speciality generic pharmaceutical company in the world. The company manufactures and markets a large basket of pharmaceutical formulations covering a broad spectrum of chronic and acute therapies. It includes generics, branded generics, complex or difficult to make technology intensive products, over-the-counter (OTC) products, anti-retrovirals (ARVs), Active Pharmaceutical Ingredients (APIs) and intermediates. The product portfolio of over 2000 high quality molecules covers multiple dosage forms, including tablets, capsules, injectables, inhalers, ointments, creams and liquids. The products cater to a vast range of therapeutic segments covering psychiatry, anti-infectives, neurology, cardiology, orthopaedic, diabetology, gastroenterology, ophthalmology, nephrology, urology, dermatology, gynaecology, respiratory, oncology, dental and nutritionals. The company has global presence with 41 manufacturing facilities across the world. India and the US are two predominant markets, accounting for nearly 70% of the company's revenue. The company has a robust product pipeline and established presence in Europe and high-growth emerging markets like Russia, Romania, South Africa, Brazil and Mexico. The company has entered into a joint-venture agreement with MSD (Merck) to develop and bring differentiated branded generics to emerging markets. Sun Pharmaceutical Industries invests around 7-8% of its global revenue each year in R&D. The R&D capabilities span the development of differentiated products such as liposomal products, inhalers, lyophilized injections and nasal sprays, besides controlled release dosage forms. Sun Pharmaceutical Industries Ltd was incorporated in the year 1983. The company began operations in Kolkata with just 5 products to treat psychiatry ailments. They set up a compact manufacturing facility for tablets/capsules at Vapi. Sales were initially limited to two states in Eastern India. In the year 1986, the company set up an administrative office in Mumbai. They extended the customer coverage to select cities in Western India. In the year 1987, they rolled out their marketing operations nation-wide. In the year 1988, the company launched Monotrate and Angizem products. In the year 1989, they introduced Products used in gastroenterology. They moved their corporate office to Baroda. Also, they began exporting their products to neighboring countries. In the year 1998, the company established their first research center, SPARC and this created the base for strong product and process development that enabled growth in the subsequent years. Also, they began office in Moscow. In the year 1994, the company was listed on the main stock exchanges in India. They started production in a dosage form plant at Silvassa. Also, they completed the major expansion at Vapi plant. In the year 1995, the company's first API plant at Panoli started production. Also, a new division, Azura, was begun for cardiology products. Inca, a new division to market critical care medication to intensive care units began operations. They strengthened the international marketing with offices in Ukraine and Belarus. In the year 1996, the company acquired an API plant at Ahmednagar from the multinational Knoll Pharmaceutical, and expanded and substantially upgraded for regulated markets, with capacity addition over the years across differentiated API lines such as anticancers and peptides. Also, the company acquired equity stake in Gujarat Lyka Organics Ltd., a manufacturer of Cephalexin Active with a USFDA approval for the intermediate, 7ADCA. In the year 1997, the company's headquarters was shifted to Mumbai, India's commercial capital. Also, they began the first of their international acquisitions with an initial $7.5 million investment in Caraco, Detroit. Also, they took equity stake in MJ Pharma, a manufacturer of several dosage form lines with UK MHRA approval for Cephalexin capsules. The company acquired TDPL with an extensive product offering and its portfolio streamlined. In the year 1998, the company acquired a basket of products, including several respiratory/asthma brands acquired from Natco Pharma. Their new formulation plant at Silvassa commenced operations. In the year 2001, the company built a new formulation plant in Dadra. Also, the erstwhile TDPL division was renamed Spectra. A new division, Arian, targeting cardiologists/physicians and diabetologists, was launched. In the year 2004, the company acquired common stock and options from 2 large shareholders of Caraco, increasing stake to over 60% from 44% at a total outlay of about $42 million. The upgraded and expanded formulation site in Halol, India (the erstwhile MJ Pharma site) received approval from USFDA, UK MHRA, South African MCC, Brazilian ANVISA and Columbian INVIMA. During the year, the company completed the construction at a formulation manufacturing site at Jammu. They commissioned their first joint venture manufacturing unit, in Dhaka, Bangladesh. Also, two of their API factories received USFDA approval, taking the total number of US FDA approved sites to three. The company acquired a Cephalosporin Active manufacturer, Phlox Pharma, with European approval for cefuroxime axetil amorphous. In December 2004, a research centre spread over 16 acres was inaugurated by the President of India, with special lab space for drug discovery and innovation. In the year 2005, the company bought a plant in Bryan, Ohio, US and the business of ICN, Hungary from Valeant Pharma. In December 2005, they acquired the intellectual property and assets of Able Labs from the US District Bankruptcy court in New Jersey. In the year 2007, the company de-merged the innovative research and business into a new company, SPARC Ltd. SPARC Ltd was listed on the stock exchanges in India, the first pure research company to be so listed. In May 2007, the company along with their subsidiaries, signed definitive agreements to acquire Taro Pharmaceutical Industries Ltd., a multinational generic manufacturer with established subsidiaries, manufacturing and products across the US, Israel, Canada for $454 million. In November 2008, the company along with their subsidiaries acquired 100% ownership of Chattem Chemicals, Inc., a narcotic raw material importer and manufacturer of controlled substances with an approved API facility in Tennessee. This offers vertical integration for its controlled substance dosage form business in the US. In September 2010, the company acquired Taro Pharmaceuticals. This acquisition doubled the size of their US business and brought them a range of generics including a strong line of dermatologicals. In April 2011, MSD in India and Sun Pharmaceutical Industries Ltd announced formation of an India-specific strategic partnership agreement under which Sun Pharma will have the right to market, promote and distribute MSD's diabetes products, sitagliptin and sitagliptin plus metformin, under different brand names in India. In June 14, 2011, Caraco Pharmaceutical Laboratories Ltd (Caroco) merged with a subsidiary of the company. Thus, Caraco became a wholly owned subsidiary of the company. In 2012, Sun Pharma bagged USFDA approval for its AND Application for generic Zyprexa. The company also acquired URL generic business from Takeda during the year under review. In 2013, the company announced US FDA approval for generic Cymbalta. The company and Intrexon formed Joint Venture to Develop New Class of Therapeutics for Ocular Diseases. The Company announces USFDA approval for generic Prevacid, generic DoxilAr and generic DepoAr-Testosterone Injection. The company also Announces 1:1 Bonus during the year. The company also announces Tentative USFDA approval for generic Januvia & Glumetza. In 2014, the company announced US FDA approval for generic Temodar. The company acquires Pharmalucence during the year. The company and Merck & Co. Inc. enter into Licensing Agreement for Tildrakizumab during the year under review. The Board of Directors of the Company at its Meeting held on April 06, 2014 has approved the scheme of arrangement between Ranbaxy Laboratories Limited and the Company under the provisions of the sections 391 to 394 and other applicable provisions of the Companies Act, 1956 and corresponding provisions of the Companies Act, 2013 subject to receipt of necessary approvals, consents and filings. In 2015, the company receives US FTC clearance for Ranbaxy acquisition. The company and AstraZeneca enter into distribution agreement for ticagrelor in India during the year. SPARC Licenses Xelpros (Latanoprost BAK-free) to Sun Pharma. During the year, Hon'ble High Court of Gujarat, at Ahmedabad has approved the Scheme of Amalgamation of Sun Pharma Global Inc. (SPGI), wholly-owned subsidiary of the Company. The company also announces US FDA Approval for Ximino TM. The company also announces another successful completion of Opiates business acquisition in Australia and also acquires InSite Vision Incorporated. The company announces Absorica patent litigation settlement during the year under review. On 10 December 2015, Sun Pharmaceutical Industries announced that it has entered into a tripartite research and option agreement with Israel-based Weizmann Institute of Science and Spain's Health Research Institute of Santiago de Compostela (IDIS) to develop breakthrough products for the treatment of neurological diseases like brain stroke as well as glioblastoma, a lethal brain cancer. On 14 December 2015, Sun Pharmaceutical Industries announced that as a part of its manufacturing consolidation in the US, one of its wholly owned subsidiaries has entered into an agreement with Nostrum Laboratories Inc. (Nostrum) for the divestment of the Bryan (Ohio) unit in the US. As a part of the agreement, the Sun Pharma subsidiary has divested this unit as a going concern along with the employees and related products to Nostrum. On 19 December 2015, Sun Pharmaceutical Industries announced that it has received a Warning Letter from the USFDA as a result of the September 2014 inspection for its facility located at Halol, Gujarat in India. Post the September 2014 inspection, the US FDA has withheld future product approvals from the Halol facility. Sun Pharma said that the company expects to request a re-inspection by USFDA upon completion of its remediation commitments. Sun Pharma also said at that time that the Halol facility will continue to supply important drug products to meet its obligations to its customers and the patients who use the drugs in the United States and around the world. On 23 March 2016, Sun Pharma and AstraZeneca Pharma India Limited announced a partnership for the distribution of dapagliflozin, an innovative Type 2 diabetes medicine, in India. Dapagliflozin is AstraZeneca India's leading diabetes medicine. Under the agreement, Sun Pharma will promote and distribute dapagliflozin under the brand name Oxra. AstraZeneca India markets dapagliflozin under the brand name Forxiga and under the terms of the agreement, both companies will promote, market and distribute dapagliflozin in India under different brand names. AstraZeneca will retain the intellectual property rights to dapagliflozin. Sun Pharma will also gain the rights to promote and distribute the combination of dapagliflozin with metformin under the brand name Oxramet after requisite regulatory approval. On 29 March 2016, Sun Pharma announced the acquisition of 14 established prescription brands from Novartis AG and Novartis Pharma AG in Japan. According to the agreements entered into between the parties, a wholly-owned subsidiary of Sun Pharma will acquire the portfolio consisting of 14 established prescription brands from Novartis for a cash consideration of US$ 293 million. These brands have combined annualized revenues of approximately US$ 160 million and address medical conditions across several therapeutic areas. Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorizations to Sun Pharma's subsidiary. The acquired brands will be marketed by a reliable and established local marketing partner under the Sun Pharma label. The local marketing partner will also be responsible for distribution of the brands. On 4 May 2016, Sun Pharma and International Centre for Genetic Engineering and Biotechnology (ICGEB) signed an agreement to develop a novel botanical drug for treatment of dengue. Through this agreement Sun Pharma will follow up on earlier pre-clinical collaboration between ICGEB and erstwhile Ranbaxy Laboratories. Sun Pharma will develop Cipa, a botanical drug following a drug registration process similar to a new chemical entity, consisting of all required in-vitro, in-vivo, pre-clinical and clinical studies meeting all regulatory standards of India and other regulatory agencies worldwide. A botanical drug is a plant-derived medicinal product that is intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in humans. On 4 June 2016, Sun Pharma announced that as a part of its manufacturing consolidation in the US, one of its wholly owned subsidiaries has entered into an agreement with Frontida BioPharm, Inc. (Frontida) for divestment of its two oral solid dosage manufacturing facilities located at Philadelphia, PA, and Aurora, IL, both in the US, along with 15 related pharmaceutical products. In connection with the transaction, Frontida has agreed to continue manufacturing certain products for Sun Pharma at these facilities on a contract basis for a predetermined period. The Board of Directors of Sun Pharma at its meeting held on 23 June 2016 approved buyback of fully paid up equity shares of the company through the tender offer route at Rs 900 per share. The purpose of the buyback is to return surplus funds to the equity shareholders and thereby, enhancing the overall returns to shareholders. On 18 July 2016, Sun Pharma and Sun Pharma Advanced Research Company Ltd. (SPARC) announced a licensing arrangement for SPARC's ELEPSIA XR (Levetiracetam Extended Release tablets). As per the agreement, SPARC will license ELEPSIA to a wholly-owned subsidiary of Sun Pharma for the US market. SPARC will receive an up-front payment of US$10 million from Sun Pharma. It is also eligible for certain additional milestone payments and defined royalties linked to any future sales of ELEPSIA XR. On 27 July 2016, Sun Pharma and Almirall announced a licensing agreement on the development and commercialization of tildrakizumab for psoriasis in Europe. Under terms of the license agreement, Almirall will pay Sun Pharma an initial upfront payment of US $50 million. Sun Pharma will be eligible to receive development and regulatory milestone payments and, additionally, sales milestone payments and royalties on net sales. Almirall will be able to lead European studies, and participate in larger global clinical studies for psoriasis indication subject to the terms of the Sun Pharma - Merck agreements, as well as certain cost sharing agreements. Sun Pharma will continue to lead development of tildrakizumab for other indications, where Almirall will have right of first negotiation for certain indications in Europe. On 6 September 2016, Sun Pharma announced that it has signed a strategic distribution alliance with Mitsubishi Tanabe Pharma Corporation, Japan for 14 prescription brands. Under this alliance, Mitsubishi Tanabe Pharma Corporation will market and distribute all the 14 brands as well as provide information on their proper use to healthcare professionals. On 19 October 2016, Sun Pharma and International Centre for Genetic Engineering and Biotechnology (ICGEB) announced their new collaboration for development of a dengue vaccine, targeted against all the four serotypes of Dengue virus that cause disease in humans. According to the agreement, Sun Pharma will fund and support further development of the vaccine candidate and existing ICGEB Know-How and Patents. ICGEB will grant Sun Pharma exclusive rights and licenses for development and commercialization of this vaccine globally. ICGEB will receive pre-defined royalty and milestone payments. On 26 October 2016, Sun Pharmaceutical Industries announced the execution of definitive agreements by its wholly owned subsidiary for the acquisition of 100% of Ocular Technologies, Sarl (OTS), a portfolio company of Auven Therapeutics (Auven), an international private equity company focused on accelerated development of breakthrough therapeutic drugs. OTS owns exclusive, worldwide rights to Seciera (cyclosporine A, 0.09% ophthalmic solution). Sun Pharma will pay Auven US$ 40 million upfront, plus contingent development milestones and sales milestones as well as tiered royalty on sales of Seciera as consideration for this acquisition.On 23 November 2016, Sun Pharma announced the execution of definitive agreements by its wholly owned subsidiary for the acquisition of 85.1% ofJSC Biosintez, a Russian pharmaceutical company engaged in manufacture and marketing of pharmaceutical products in Russia and CIS region. The equity consideration for the 85.1% stake is US$ 24 million. Sun Pharma would also assume a debt of approximately US$ 36 million as part of this transaction. Biosintez is a Russian pharmaceutical company focusing on the hospital segment with annual revenues of approximately US$ 52 million for 2015. It has a manufacturing facility in Penza region with capabilities to manufacture a wide variety of dosage forms including pharmaceuticals for injections, blood substitutes, blood preservatives, ampoules, tablets, ointment, creams, gels, suppositories, APIs, etc. On 28 November 2016, Sun Pharma announced the launch of a branded ophthalmic product BromSite 0.075% in the US market. It was the first branded product launched by the company in the USA following its focus on Specialty Business. On 12 December 2016, Sun Pharma and Israel-based Moebius Medical announced that they have entered into an exclusive worldwide licensing deal to further develop MM-II, a novel pharmaceutical candidate for the treatment of pain in osteoarthritis. According to the agreement, Sun Pharma will fund further development of Moebius Medical's lead product, MM-II, and undertake its global commercialization. Moebius Medical will conduct requisite pre-clinical studies, and will assume responsibility for product development and manufacturing through the end of Phase-II studies. Sun Pharma will assume responsibility for further clinical studies, regulatory submissions and product commercialization. Moebius Medical will receive an upfront payment, development-based and sales-based milestone payments, and tiered royalties on sales from Sun Pharma. On 22 December 2016, Sun Pharma announced its plans to acquire a branded oncology product Odomzo from Novartis. The agreement was signed for an upfront payment of US$ 175 million and additional milestone payments. Odomzo (Sonidegib) was approved by the USFDA in July 2015. Odomzo is a hedgehog pathway inhibitor indicated for the treatment of adult patients with locally advanced basal cell carcinoma (laBCC) that has recurred following surgery or radiation therapy, or those who are not candidates for surgery or radiation therapy. On 4 January 2017, Sun Pharma announced successful Phase 3 confirmatory clinical trial results for Seciera for the treatment of dry eye disease. Seciera is being developed by Ocular Technologies, a company acquired by Sun Pharma. Following this acquisition, Sun Pharma owns exclusive, worldwide rights to Seciera and is developing it to commercialize for global markets including US, Europe, and Japan, as well as several emerging markets. On 14 March 2017, Sun Pharmaceutical Industries announced that USFDA will lift the Import Alert imposed on the company's Mohali, Punjab manufacturing facility and remove the facility from the Official Action Initiated (OAI) status. This proposed action will clear the path for Sun Pharma to supply approved products from the Mohali facility to the US market, subject to normal USFDA regulatory requirements. The Mohali facility was inherited by Sun Pharma as part of its acquisition of Ranbaxy Laboratories in 2015. The USFDA had taken action against the Mohali facility in 2013 when it ordered the facility to be fully subject to Ranbaxy's Consent Decree of Permanent Injunction. Certain conditions of the consent decree will continue to be applicable to the Mohali facility. On 27 June 2017, Sun Pharmaceutical Industries and National Institute of Virology (NIV), Pune, an institution of the Indian Council of Medical Research, Department of Health Research, Ministry of Health and Family Welfare, New Delhi announced that they have signed an agreement for testing phytopharmaceutical, biologic and chemical entities developed by Sun Pharma against Zika, Chikungunya and Dengue viruses. Sun Pharma will provide drug molecules to NIV for testing against Zika, Chikungunya and Dengue in model systems. Candidate molecules with encouraging data will then be taken forward for commercial development. On 4 July 2017, Sun Pharmaceutical Industries and Samsung BioLogics announced a strategic long-term manufacturing agreement for Tildrakizumab, an investigational IL-23p19 inhibitor being evaluated for the treatment of moderate to severe plaque psoriasis. According to the agreement, Sun Pharma has appointed Samsung BioLogics to manufacture Tildrakizumab. The approximate value of the contract will be US$ 55.5 million. The regulatory filings associated with tildrakizumab have been accepted for review by the U.S. Food and Drug Administration and the European Medicines Agency (EMA). On 16 January 2018, Sun Pharmaceutical Industries announced that its wholly owned subsidiaries have reached an agreement with Ironwood Pharmaceuticals, Inc. and Allergan plc to resolve the patent litigation regarding submission of an Abbreviated New Drug Application (ANDA) for a generic version of Linzess (Linaclotide capsules) in the US. Pursuant to the terms of the settlement, Ironwood Pharmaceuticals and Allergan will grant, the wholly owned subsidiaries of Sun Pharma, a license to market a generic version of Linzess in the United States beginning 1 February 2031 (subject to USFDA approval) or earlier under certain circumstances.

Sun Pharmaceuticals Industries Ltd Directors Reports

Your Directors take pleasure in presenting the Twenty-Seventh Annual Report and Company's Audited Financial Statements for the financial year ended March 31, 2019.

Financial Results

*Refer Note 56(11) of Standalone Financial Statements 'Refer Note 66 of Consolidated Financial Statements

Dividend

Your Directors have recommended a dividend of र2.75 (Rupees two and paise seventy five only) per equity share of र1/- each [previous year र2.00/- per equity share of र1/- each] for the year ended March 31, 2019, subject to the approval of the equity shareholders at the ensuing 27th Annual General Meeting of the Company.

The dividend payout is in accordance with the Company's Dividend Distribution Policy. The Dividend Distribution Policy of the Company is provided as रAnnexure-A' to this Report. The policy is also available on the website of the Company and can be accessed through the web link: http:// www.sunpharma.com/policies .

Changes in Capital Structure

During the year under review, the Company has allotted 11790 equity shares of र1/- each under Sun Employee Stock Option Scheme-2015 thereby the paid up share capital of the Company increased to र2,399,334,970/- (Rupees Two Billion Three Hundred Ninety Nine Million Three Hundred Thirty Four Thousand Nine Hundred Seventy only) as on March 31, 2019.

Scheme of Arrangements

1. During the year, the Hon'ble National Company Law Tribunal of Gujarat at Ahmedabad had vide its Order dated October 31, 2018 sanctioned the Scheme of Arrangement among the Company and Sun Pharma Global FZE ("Transferor Company"), a wholly owned subsidiary of the Company and their respective members and creditors ("Scheme") whereby the Specified Undertaking (as defined in the Scheme) of Transferor Company stands demerged into the Company w.e.f. December 01, 2018 with appointed date being April 01, 2017. No consideration was paid pursuant to the Scheme.

2. During the year, the Board of Directors at its meeting held on May 25, 2018 had approved a Composite Scheme of Arrangement among the Company and Sun Pharma (Netherlands) B.V. (Transferee Company-1) and Sun Pharmaceutical Holdings USA Inc.

(Transferee Company-2), wholly owned subsidiaries of the Company and their respective members and creditors ("Composite Scheme"), for demerger of Specified Investment Undertaking -1 (as defined in the Composite Scheme) of the Company into Sun Pharma (Netherlands) B.V. and Specified Investment Undertaking -2 (as defined in the Composite Scheme) of the Company into Sun Pharmaceutical Holdings USA Inc. The Hon'ble National Company Law Tribunal of Gujarat, at Ahmedabad ("NCLT") has vide its Order dated April 11, 2019 dispensed with convening of meeting of secured creditors of the Company and ordered to convene the meeting of equity shareholders and unsecured creditors of the Company on June 04, 2019 to approve the Composite Scheme with appointed date as April 01, 2017 or such other date as may be agreed between the Transferee Company-1, Transferee Company-2 and the Company and approved by the NCLT. Pursuant to said Composite Scheme, no consideration shall be paid. This demerger shall enable the Company to address the risks and policies, ability to strategise the remaining business for long term growth, consolidation and creation of shareholder value, etc.

Extract of Annual Return

The extract of Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 (‘the Act') in form MGT-9 is provided as ‘Annexure-B' to this Report and is also made available on the website of the Company at https://www.sunpharma.com/investors/annualreports .

Subsidiaries/ Joint Ventures/ Associate Companies

The statement containing the salient features of the Financial Statements of the Company's subsidiaries/ joint ventures/ associate companies is given in Form AOC-1, provided in Notes to the Consolidated Financial Statements, forming part of the Annual Report.

The highlights of performance of subsidiaries, joint ventures and associate companies and their contribution to the overall performance of the Company during the financial year is given under ‘Annexure A' to the Consolidated Financial Statements forming part of the Annual Report.

Details pertaining to companies that became subsidiaries/ joint ventures/associates and those that ceased to be the subsidiaries/joint ventures/associates of the Company during the year are provided in Note no. 39 of the Notes to the Consolidated Financial Statements, forming part of the Annual Report.

Directors and Key Managerial Personnel

Mr. Sailesh T. Desai and Mr. Kalyanasundaram Subramanian, Whole-time Directors of the Company retire by rotation at the ensuing 27th Annual General Meeting of the Company and being eligible offer themselves for reappointment.

During the year, Mr. Gautam Doshi was appointed as an Additional Independent Director of the Company with effect from May 25, 2018. Mr. Vivek Chaand Sehgal and Mr. Gautam Doshi have been appointed as Independent Directors of the Company for a term of 5 (five) years each effective from November 14, 2017 and May 25, 2018 upto November 13, 2022 and May 24, 2023 respectively by the members at the 26th Annual General Meeting of the Company held on September 26, 2018.

Pursuant to Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") the consent of the members by way of Special Resolution, was obtained at the 26th Annual General Meeting of the Company for continuation as Director beyond the age of seventy five years, of Mr. Israel Makov, Non-Executive Director and the Chairman of the Company, as he had attained an age of 79 years.

Mr. S. Mohanchand Dadha, Mr. Keki Mistry and Mr. Ashwin Dani, Independent Directors having completed second term of 2 (two) years of their respective appointments on the conclusion of the 26th Annual General Meeting of the Company, all the three aforementioned Independent Directors retired and ceased to be Directors of the Company w.e.f. the conclusion of the 26th Annual General Meeting of the Company held on September 26,

2018. The Board of Directors places on record their appreciation for contribution made by Mr. S. Mohanchand Dadha, Mr. Keki Mistry and Mr. Ashwin Dani during their tenure as Independent Directors of the Company.

Mr. Sudhir V. Valia has stepped down from the position of Whole-time Director of the Company w.e.f. May 29, 2019. However, he shall continue as a Non-Executive and Non-Independent Director of the Company.

Appropriate resolutions for the re-appointment of the Directors are being placed for your approval at the ensuing 27th Annual General Meeting. Your Directors recommend the same for approval by the members at the ensuing 27th Annual General Meeting of the Company.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Act and under Listing Regulations.

In the opinion of the Board, the Independent Directors of the Company fulfil the conditions specified in the Act and Listing Regulations and are independent of the management.

Remuneration Policy for Directors, Key Managerial Personnel and Other Employees and Criteria for Appointment of Directors

For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy on remuneration of Directors, Key Managerial Personnel and other Employees.

The salient features of the Remuneration Policy of the Company are as under:

(A) Guiding Principles for remuneration: The Company shall remunerate all its personnel reasonably and sufficiently as per industry benchmarks and standards. The remuneration shall be commensurate to retain and motivate the human resources of the Company.

The compensation package will, inter alia, take into account the experience of the personnel, the knowledge & skill required including complexity of his job, work duration and risks associated with the work, and attitude of the employee like positive outlook, team work, loyalty etc.

(B) Components of Remuneration: The following will be the various remuneration components which may be paid to the personnel of the Company based on the designation and class of the personnel.

a) Fixed compensation: The fixed salaries of the Company's personnel shall be competitive and based on the individual personnel's responsibilities and performance.

b) Variable compensation: The personnel of the Company may be paid remuneration by way of variable salaries based on their performance evaluation. Such variable salaries should be based on the performance of the individual against his short and long term performance objectives and the performance of the Company.

c) Share based payments: The Board may, on the recommendation of the Nomination and Remuneration Committee, issue to certain class of personnel a share and share price related incentive program.

d) Non-monetary benefits: Senior management personnel of the Company may, on a case to case basis, be awarded customary non-monetary benefits such as discounted salary advance/credit facility, rent free accommodation, Company cars with or without chauffer, share and share price related incentive, reimbursement of electricity and telephone bills etc.

e) Gratuity/group insurance: Personnel may also be awarded to group insurance and other key man insurance protection. Further as required by the law necessary gratuity shall be paid to the personnel.

f) Commission: The directors may be paid commission if approved by the shareholders. The shareholders may authorise the Board to declare commission to be paid to any director of the Board.

C) Entitlement: The authority to determine the entitlement to various components as aforesaid for each class and designation of personnel shall be as follows

Note: For the purpose of this Policy, the term 'Senior Management' shall have the same meaning as defined under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015

The complete Policy as approved by the Board is available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies .

Familiarisation programme for the Independent Directors

In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc.

The details of the Familiarisation Programme conducted are available on the website of the Company www.sunpharma . com and can be accessed through the web link: http:// www.sunpharma.com/policies .

Number of meetings of the Board

The Board of Directors of the Company met 5 (Five) times during the year under review on May 25, 2018; August 14, 2018; September 26, 2018; November 13, 2018 and February 12, 2019. The particulars of attendance of the Directors at the said meetings are provided in detail in the Corporate Governance Report, which forms a part of this Report. The intervening gap between the meetings was within the period prescribed under the Act and Listing Regulations.

Evaluation of performance of the Board, its Committees and Individual Directors

During the year, the evaluation of the annual performance of individual Directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act, relevant Rules, and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations and based on the circular issued by SEBI dated January 5, 2017 with respect to Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved the criteria for the performance evaluation of the Board, its Committees and individual Directors as per the SEBI Guidance Note on Board Evaluation.

The Chairman of the Company interacted with each Director individually, for evaluation of performance of the individual Directors. The evaluation for the performance of the Board as a whole and of the Committees were conducted by way of questionnaires.

In a separate meeting of Independent Directors, performance of Non Independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-executive Directors.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as structure and diversity of the Board, competency of Directors, experience of Director, strategy and performance evaluation, secretarial support, evaluation of risk, evaluation of performance of the management and feedback, independence of the management from the Board etc. The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the Board and contribution to decisions of the Board. The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as qualification, experience, knowledge and competency, fulfilment of functions, availability and attendance, initiative, integrity, contribution and commitment etc., and the Independent Directors were additionally evaluated on the basis of independence, independent views and judgement etc. Further the evaluation of Chairman of the Board, in addition to the above criteria for individual Directors, also included evaluation based on effectiveness of leadership and ability to steer the meetings, impartiality, etc.

The Chairman and other members of the Board discussed upon the performance evaluation of every Director of the Company and concluded that they were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.

The summary of the feedback from the members were thereafter discussed in detail by the members. The respective Director, who was being evaluated, did not participate in the discussion on his/her performance evaluation and had exited the meeting for the said discussion. During the discussion in respect of performance of Mr. Dilip Shanghvi and Mr. Sudhir Valia, both Mr. Dilip Shanghvi and Mr. Sudhir Valia had exited the meeting.

The Chairman additionally interacted with each Director individually, for evaluation of performance of all Individual Directors and Mr. Dilip Shanghvi, along with other Directors had evaluated the performance of Mr. Israel Makov as the Chairman and as an Individual Director. They were satisfied with the overall performance of the Directors individually and that the Directors generally met their expectations of performance.

Human Resources

We have more than 32,000 talented employee base spread across multiple geographies in various sales offices, R&D centers, 40 + manufacturing locations, Regional offices and Corporate office. We believe our employees are pivotal to all the initiatives that drive us to realise our future plans. Human Resource agenda encourages high performance culture with focus on Employee safety & welfare, Employee development & Productivity. Your Directors would also like to take this opportunity to express their appreciation for the dedication and commitment of the employees of the Company and look forward to their continued contribution.

Information as per Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in ‘Annexure-C' to this Report. Further, the information pertaining to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pertaining to the names and other particulars of employees is available for inspection at the Registered office of the Company during business hours and pursuant to the second proviso to Section 136(1) of the Act, the Report and the accounts are being sent to the members excluding this. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary/Compliance Officer at Corporate office or Registered office address of the Company.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavour of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the manufacturing sites, R & D set ups & corporate office during the year under review. The Company has submitted the Annual Returns to the local authorities, as required under the above mentioned Act.

During the financial year ended March 31, 2019, three complaints pertaining to sexual harassment were received and the same were resolved by the Company. There are no complaints pending as at the end of the financial year.

Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Auditors Statutory Auditors

S R B C & Co LLP, Chartered Accountants, (Firm's Regn. No. 324982E/ E300003), were appointed as the Statutory Auditors of the Company for a period of 5 (five) years at the 25th Annual General Meeting of the Company to hold office till the conclusion of the 30th Annual General Meeting of the Company.

The Auditor's Report for the financial year ended March 31, 2019, has been issued with an unmodified opinion, by the Statutory Auditors.

Secretarial Auditor

The Board had appointed KJB & Co. LLP, Practicing Company Secretaries, Mumbai to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2019. The Secretarial Audit Report in the Form No. MR-3 for the year is provided as ‘Annexure-D' to this Report.

The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark.

Cost Auditor

The Board has appointed Messrs B M Sharma & Associates, Cost Accountants, Pune (Firm's Registration No. 100537) as Cost Auditor of the Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the financial year 2019-20.

The Company is required to maintain Cost Records as specified by the Central Government under Section 148(1) of the Act and accordingly, such accounts and records are made and maintained by the Company.

Secretarial Standards

The Company has complied with the applicable Secretarial Standards as amended from time to time.

Loans, Guarantees & Investments

The particulars of loans, guarantees and investments have been disclosed in the Financial Statements.

Related Party Transactions

The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link http://www.sunpharma.com/ policies. All contracts/arrangements/transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm's length basis.

As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act exceeding ten percent of the annual consolidated turnover as per the last audited financial statements are given in Form AOC-2 provided as ‘Annexure-E' to this Report.

Audit Committee Composition

The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Report.

Risk Management

The Board of Directors has constituted a Risk Management Committee which is entrusted with the responsibility of overseeing various strategic, operational and financial risks that the organisation faces, along with the adequacy of mitigation plans to address such risks. The Corporate Governance Report, which forms part of this report, contains the details of Risk Management Committee of the Company. There is an overarching Risk Management Policy in place has been reviewed and approved by the Board.

The Company has developed & implemented an integrated Enterprise Risk Management Framework through which it identifies monitors, mitigates & reports key risks that impacts its ability to meet the strategic objectives. The Company's ERM framework is based on the recommendations by the Committee of Sponsoring Organisations (COSO) to further the organisation's endeavor to strengthen ERM framework and processes using best practices. The ERM team engages with all Function heads to identify internal and external events that may have an adverse impact on the achievement of Company's objectives and periodically monitors changes in both internal and external environment leading to emergence of a new threat/risk. These risks are captured in the form of a risk register with all the relevant information such as risk description, root cause and any existing mitigation plans. The risk register is refreshed annually.

Risks are categorised into Strategic, Financial, Operational, Compliance & Reputational. ERM risk assessments covering Company's various businesses and functions are a key input for the annual internal audit program. During FY 2018-19, the ERM team focused on reviewing effectiveness of actions taken to mitigate certain business, cyber security and other operational risks.

Internal Financial Controls

The Company believes that internal control is a necessary prerequisite of Governance and that freedom should be exercised within a framework of checks and balances.

The Company has a well-established internal control framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of financial and operational controls. The management is committed to ensure an effective internal control environment, commensurate with the size and complexity of the business, which provides an assurance on compliance with internal policies, applicable laws, regulations and protection of resources and assets.

Global Internal Audit

An independent and empowered Global Internal Audit Function (GIA) at the corporate level carries out risk-focused audits across all businesses (both in India and overseas), to ensure that business process controls are adequate and are functioning effectively. These audits include reviewing finance, operations, safeguarding of assets and compliance related controls. Areas requiring specialised knowledge are reviewed in partnership with external subject matter experts.

GIA's functioning is governed by the Audit Charter, duly approved by the Audit Committee of the Board, which stipulates matters contributing to the proper and effective conduct of audit. The audit processes are fully automated on a ‘SunScience' tool which integrates audit, Internal Financial Controls (IFC) and Enterprise Risk Management (ERM) modules.

The Company's operating management closely monitors the internal control environment and ensures that the recommendations of GIA are effectively implemented.

The Audit Committee of the Board monitors performance of GIA, periodically reviews key findings and provides strategic guidance.

Corporate Social Responsibility

In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility) Rules, 2014, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee are available on the website of the Company and can be accessed through the web link: http://www.sunpharma.com/policies . The average net profit of the Company in the three immediately preceding financial years is negative, therefore the Company was not required to spend on CSR activities during the year, however, the Company has voluntarily spent on CSR activities.

The annual report on CSR activities containing details of voluntary expenditure incurred by the Company and brief details on the CSR activities are provided in ‘Annexure-F' to this Report.

Public Deposits

The Company has not accepted any deposit from the Public during the year under review, under the provisions of the Act and the rules framed thereunder.

Management Discussion and Analysis

The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report.

Corporate Governance Report

Report on Corporate Governance and Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as ‘Annexure-G' to this Report.

Employees' Stock Option Schemes

The Company presently has only one Employees' Stock Option Scheme, which is inherited from erstwhile Ranbaxy Laboratories Limited ("Ranbaxy"). The scheme is through Direct Route and has been named as Sun Pharma Employee Stock Option Scheme-2015. The scheme was adopted by the Company with certain amendments consequent upon merger of erstwhile Ranbaxy into the Company. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Disclosure with respect to the Employees' Stock Option Scheme in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is available on the Company's website and can be accessed at: http://www.sunpharma.com/pdflist/all-documents .

Significant and Material Orders Passed by the Regulators or Courts or Tribunals

There are no significant and material orders passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future.

Whistle Blower Policy/Vigil Mechanism

To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the Company has adopted a ‘Global Whistle Blower Policy' for Sun Pharmaceutical Industries Limited and all its subsidiaries, in addition to the existing Global Code of Conduct that governs the actions of its employees. Further details on vigil mechanism of the Company are provided in the Corporate Governance Report, forming part of this Report.

Directors' Responsibility Statement

Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

a) in the preparation of the annual accounts for the financial year ended March 31, 2019, the applicable accounting standards have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Consolidated Accounts

The consolidated financial statements for the year ended March 31, 2019 have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

Credit Rating

ICRA Ltd. has reaffirmed the highest credit rating of ‘[ICRA] A1+'/‘[ICRA] AAA(Stable)' for the bank facilities, long term/ short term borrowings and commercial paper programs of the Company.

Further, CRISIL Ltd. has also reaffirmed the highest credit rating of ‘CRISIL A1+ and CRISIL AAA/Stable' for short term & long term bank facilities and commercial paper programs of the Company.

Business Responsibility Reporting

The Business Responsibility Report of the Company for the year ended March 31, 2019, forms part of the Annual Report and is also made available on the website of the Company at http://www.sunpharma.com/pdflist/all-documents .

Acknowledgements

Your Directors wish to thank all stakeholders, employees and business partners, Company's bankers, medical professionals and business associates for their continued support and valuable cooperation.

The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.

Sun Pharmaceuticals Industries Ltd Company Background

Sun Pharmaceuticals Industries Ltd Company Management

Sun Pharmaceuticals Industries Ltd Listing Information

Sun Pharmaceuticals Industries Ltd Finished Product