Cipla : Annual Report 2022-23 (Double page)

Force for Good

Pioneering | Innovative | Rooted in Care

Cipla Limited Annual Report 2022-23

Table of Contents

Corporate Overview & Integrated Report

About this Report	02
About Cipla	03
Our First Principles	04
Financial Highlights	05
Global Reach	06
Board of Directors	08
Management Council	09
Ten-Year Highlights	10
Corporate Information	11
Chairman's Message	12
Executive Vice-Chairperson's Message	14
MD & GCEO's Message	16
CARE - Our ESG positioning	18
Awards and Accolades	20
Our Strategy towards Building an Integrated
Healthcare Organisation	22
Stakeholder Engagement	40
Materiality Assessment	44
Enterprise Risk Management	46
Manufactured Capital	52
Intellectual Capital	58
Human Capital	64

Statutory Reports

Board's Report	121
Business Responsibility & Sustainability Report	144
Report on Corporate Governance	165

Financial Statements

Standalone Financial Statements with Auditor's Report	197
Consolidated Financial Statements with Auditor's Report	280
Salient Features of Financial Statements of	371
Subsidiaries and Associates
Independent Assurance Statement	372
GRI Content Index	375
Glossary of Abbreviations	381

Force for Good

Pioneering | Innovative | Rooted in Care

A compassionate approach to medicine and healthcare that goes beyond the pursuit of profit. This has been the force impelling Cipla's history over the years. The story of Cipla is one of purpose & resilience - ideals that have remained unchanged in its mission to extend care to the last mile, the rarest disease and to under-served communities.

There's a treasure trove of stories in Cipla that narrate our journey, obstacles, course corrections, successes and most importantly how our business is a real force for good.

Relationship Capital	80
Social Capital	88
Natural Capital	96
Financial Capital and Management Discussion and
Analysis	106

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From pioneering the development of metered and dry powder inhalers to an unmatched presence across the care continuum, today Cipla is helping millions across the world to breathe free. Armed with this expertise we have set our sights to become global lung leaders.

We are driving our wellness ecosystem with a focus on New Science, Better Reach and a Digital-first approach. Backed by deep consumer insights, the consumer

wellness franchise houses brands across categories including cold and cough, smoking cessation, gut health, derma, feminine hygiene and more. We are passionate about building a strong global wellness franchise and are augmenting our global consumer wellness franchise by identifying brands with high consumer potential and strengthening our Over the Counter (OTC) portfolio across India and South Africa.

Pivoting to an organisation of digital natives, we have set up several foundational elements to drive our digitisation across the value chain right from adopting Industry 4.0 to transforming patient reach and care. Creating 'Plants of the future', our Indore Oral Solid Dosage (OSD) facility received the designation of an 'Advanced 4th Industrial Revolution Lighthouse' by the World Economic Forum (WEF) in 2022. In line with our digital thrust, we have invested in platforms like GoApptiv that help in enhanced engagements across tier 2-6 towns. The Breathefree app

aims to support respiratory patients throughout their journey, from awareness and acceptance of the disease to the adherence of treatment. In South Africa, the Brandmed platform empowers patients to take active charge of their health.

We have now embarked on a journey to create the Cipla of the future by investing in therapies of the future such as biosimilars, mRNA, CAR(T) and other such promising therapies. Be it our partnership for anti- infective drug, Elores; our investment

in Ethris for mRNA-based therapies, bolstering our differentiated portfolio, strong pipeline of in-licensed biosimilars or stepping up our diabetes portfolio.

Pioneering, Innovative and firmly rooted in CARE - that's the Cipla of future and we are gearing up deliver on our commitment, putting smiles on faces and make a difference in the lives of patients.

Force for Good	Cipla Limited | Annual Report 2022-23
Pioneering | Innovative | Rooted in Care

About this Report1

Corporate Overview & Integrated Report | Statutory Reports | Financial Statements

About Cipla1

Welcoming our stakeholders to the Integrated Annual Report for FY 2022-23

It is an honour to present to our stakeholders our sixth Integrated Annual Report. We use this report to provide our readers with a holistic understanding of the quantitative and qualitative dimensions of our business. We also present our culture, strategy and performance in creating and delivering long term value to our stakeholders as a responsible pharmaceutical company.

Our core elements to enhance value creation

This report provides a comprehensive overview of our business model, organisational strategies and governance mechanisms on key topics that are material to us and our stakeholders.

We have outlined our financial and non-financial performance across six capitals which serve as a framework for understanding how our organisation creates and delivers value.

Responsibility statement

The Board firmly believes that this report provides an accurate and unbiased overview of the Company's financial, sustainability and operational performance, covering all significant matters relevant to the Company in FY 2022-23 and beyond. The Board recognises that content of this report have been prepared by different functions and business units with direction of Management Council.

Assurance

Established in 1935, Cipla is a global pharmaceutical company with a strong commitment to make medicines accessible and affordable to those in need.

Our product portfolio spans complex generics as well as drugs in the respiratory, anti-retroviral, urology, cardiology, anti-infective, CNS and various other key therapeutic segments. With a rich portfolio, we are deepening our presence in the home markets of India, as well as South Africa, North America and other key regulated and emerging markets. Our 47 manufacturing sites around the world produces 50+ dosage forms and 1,500+ generic products to cater to our 85 markets2.

Our reporting guidelines

Our Integrated Reporting process is guided by the principles and content element of the International Integrated Reporting Council's International Integrated Reporting Framework. We have also aligned our report

with some of the best practices and standards in financial and non-financial reporting observed globally.

This report has been prepared in accordance with the latest Global Reporting Initiative ('GRI') Standards. We have also presented a mapping of the United Nations Sustainable Development Goals. The financial and statutory information contained in this report is in compliance with the requirements of the Companies Act, 2013, Indian Accounting Standards, Secretarial Standards, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable laws and regulations.

Financial	Manufactured
Capital	Capital

Intellectual	Human
Capital	Capital

Social &	Natural
Relationship	Capital
Capital

Reporting boundary and scope

The Integrated Annual Report for

FY 2022-23 presents information on financial and non-financial performance of Cipla's global operations from

1st April, 2022 to 31st March, 2023. Information on our joint ventures have been disclosed as relevant. Any specific exclusions are provided in respective sections.

Assurance on financial statements has been provided by our statutory auditor Walker Chandiok & Co LLP on page no. 197 and 280 of this report. Non-financial information has been independently assured by DNV Business Assurance India Private Limited on page no. 372 of this report.

Feedback

We take this opportunity to thank all our stakeholders for their interest in our company and its performance. Hence, we place a high value on your feedback on this report and encourage you to write to us.

Stakeholder feedback can be sent to: Name: Mr Rajendra Chopra Designation: Company Secretary E-mail:[e-mail]: [phone]

Making a difference for patients has been the driving force behind Cipla's work for more than eight decades. Our paradigm changing offer of a triple anti-retroviral therapy in HIV/AIDS

at less than a dollar a day in Africa in 2001 is widely acknowledged as having contributed to bringing inclusiveness, accessibility and affordability to the centre of the HIV movement.

Cipla is the third largest pharmaceutical company in India and the third largest in the private pharmaceutical market of South Africa (IQVIA, March 2023). We are the second largest Indian exporter to emerging markets3 and also among the most dispensed generic players in the US.

Our strategy to use resources efficiently, our efforts to make medicines more available and affordable and our strong financial performance provide a strong foundation for building a responsible business that is committed to sustainable growth.

Cipla is a responsible corporate citizen and is a partner of choice for global health organisations, peers and all stakeholders owing to its humanitarian approach to healthcare, in pursuit of its objective of 'Caring for Life' and its deep-rooted community ties.

For more, please visit

www.cipla.comor click on

Twitter,Facebookand

LinkedInchannels.

1GRI 2-1, GRI 2-6

2Represent countries/markets where sales are more than USD 0.5 million

1 GRI 2-2, GRI 2-3, GRI 2-14 and Information in line with BRSR Question no. 13 of Section A

3EXIM IntelliMax data for Emerging Markets (ex-SAGA, CIS, China) for FY 2022-23

02		03

Force for Good

Pioneering | Innovative | Rooted in Care		Cipla Limited | Annual Report 2022-23		Corporate Overview & Integrated Report | Statutory Reports | Financial Statements

Financial Highlights

Revenue from
Operations	(H in crores)

8%

5-year CAGR

15,219	16,362	17,132	19,160	21,763	22,753
2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
FY	FY	FY	FY	FY	FY

PAT and PAT Margin2		(H in crores)
		PAT value
15%		PAT margin %
12.6	12.3
11.6

5-year CAGR

9.3 9.3

		9.0		2,517	2,802
1,411	1,528	1,547	2,405
2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
FY	FY	FY	FY	FY	FY

EBITDA and
EBITDA Margin1					(H in crores)
						EBITDA value
12%					EBITDA margin %
			22.5		22.1
5-year CAGR
18.6	19.4					21.0
		18.9
2,826	3,171	3,230	4,303	4,578	5,027
2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
FY	FY	FY	FY	FY	FY

Return on Invested
Capital (RoIC)3	(in %)
	21.6 23.8
	20.2

12.5

11.2

9.4

2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
FY	FY	FY	FY	FY	FY

FY 2022-23

Revenue (Ex-covid 11%)

5%

Y-O-Y Growth

EBITDA margin

22.1%

PAT margin

12.3%

Free Cash Flow

2,104

(H in crores)

RoIC

215 BPS

Y-O-Y expansion

1. EBITDA = Revenue from Operations - (Cost of Material Consumed + Purchase of Stock-in-Trade + Changes in inventory of Finished Goods, Work-in-Progress and Stock-in-Trade + Employee Benefits Expense + Other Expenses) | FY 2020-21 includes one-time income from a litigation settlement | FY 2021-22 and FY 2022-23 includes one-time covid inventory provision and other charges
2. Net profit after tax attributable to shareholders for FY 2021-22 and FY 2022-23 includes one-time impact of impairments
3. RoIC = EBITDA - depreciation and amortisation ÷ average [(fixed assets including goodwill + current assets excluding cash and cash equivalent) - current liabilities excluding borrowing]

04		05

Force for Good

Pioneering | Innovative | Rooted in Care

Global Reach1

43%

Revenue

contribution

One-India (branded prescription, trade generics, consumer health)

YoY growth ex Covid 13%

Key highlights

3rd largest overall and healthy ranks across acute and chronic therapies

26%

Revenue

contribution

Cipla Limited | Annual Report 2022-23

Corporate Overview & Integrated Report | Statutory Reports | Financial Statements

1. India Rx:
   2nd largest in chronic branded prescription business and strong market share with increasing chronic share from 56% to 59%
   Scale-up in branded In-licensing business driven by well-entrenched partnerships with global pharma companies. Strengthens diabetic portfolio by entering into a perpetual agreement with Novartis for the brand 'Galvus', and entering into psoriasis portfolio with the acquisition of Novartis's Innovator brand 'Scapho'
   Continuous rigor on making Big Brands Bigger, 20+ brands crossing 100 crores mark in Indian Pharma Market (IPM)
2. India Gx:
   Largest trade generic business in India with the focus of making Big Brands Bigger
   Expanding portfolio breadth (50+ launches) with targeted launches
   Deepening connect with channel with entering into tier 2 to tier 6 cities complemented by expanding retail taskforce
3. India consumer health:
   Continuous focus on strengthening the consumer health business by making it a H 1,000 crores + entity
   Continued to drive, illness to wellness, theme led by brand building initiatives, deepening distribution and category innovations
   Strong emphasis on improving margins. EBITDA expected to be in mid teens for upcoming year.

North America#

YoY growth 23%

Key highlights

Amongst top 10 players by prescription in the US market

Business crosses USD 730 million+ revenue for the first time; highest ever quarterly sales of USD 204 million led by differentiated portfolio

55% of our commercial portfolio ranks Top 3 in market share

Respiratory portfolio continues to hold a significant share, while contribution from gRevlimid and peptide portfolio has led to growth in our base business. Lanreotide demonstrated strong market share ramp-up with share increasing to 17%+

Strong pipeline of respiratory, peptide injectables and other complex assets.

14%

Revenue

contribution

SAGA (South Africa, Sub-Saharan Africa, Global Access)*

YoY growth5% (in ZAR)

Key highlights:

Continues to be the 3rd largest pharmaceutical corporation in South Africa private market

Cipla's private market business continues to outperform the market with a strong growth of 4.8% (~1.3x of the total private market growth).

Aided by strong R&D focus, 30 new brands were launched in the market across multiple therapies during the year For FY 2022-23, the private market further improved its share to 77% in South Africa region.

13%

Revenue

contribution

International markets**

YoY growth 2%

Key highlights:

Strong momentum continues across focused DTMs with double-digit growth in secondary market overcoming currency fluctuations

Cipla is the fastest growing pharma company in SriLanka, amongst the Top

10 and also featured in the Top 10 list of Nepalese Pharma Market for the first time

Strong respiratory filings done in European markets to strengthen future pipeline

Continued focus on growth through organic launches and partnerships to augment generic and biosimilar footprint.

3%

Revenue

contribution

API

(Active Pharmaceutical Ingredients)

YoY growth 31%

Key highlights:

Consistent growth in emerging markets; European markets picking up

Continued traction in global seeding and lock-ins

Note: Balance % contribution to sales over and above the geographies mentioned pertains to other operating income |Figures have been rounded-off | Revenue growth numbers are in local currency

• Market share data and rankings as per IQVIA MAT March, 2023
• As per Intellimex Finished Formulation Export Data for April 2022 to March 2023 and IQVIA MAT March, 2023

#TRx market share data as per IQVIA week ending 31st March, 2023

1 GRI 2-1, GRI 2-6

06		07