BUSINESS OVERVIEW

Anlon Healthcare Limited is a chemical manufacturing company engaged in the production of high-purity advanced pharmaceutical intermediates and active pharmaceutical ingredients (APIs). These serve as essential raw materials and key starting materials in the manufacturing of APIs and pharmaceutical formulations, including Finished Dosage Forms (FDFs) such as tablets, capsules, ointments, and syrups. Additionally, the company supplies ingredients for nutraceutical formulations, personal care products, and animal health products.

The product portfolio spans across pharmaceutical intermediates, APIs, nutraceutical APIs, veterinary APIs, and personal care ingredients. All API products are manufactured in compliance with Indian and international pharmacopeia standards, including IP, BP, EP, JP, and USP.

Anlon Healthcare is one of the few manufacturers of Loxoprofen Sodium Dihydrate in India, a widely used API for the treatment of pain and inflammation associated with conditions such as rheumatoid arthritis, osteoarthritis, lower back pain, frozen shoulder, neck-shoulder-arm syndrome, dental pain, and post-surgical recovery.

In addition to APIs and intermediates, the company has recently entered into custom manufacturing services for complex and novel chemical compounds, offering tailored processes with higher purity standards. With domain expertise in impurity reduction and advanced process design, the company is capable of delivering products that exceed industry benchmarks.

The company is also engaged in API development, Drug Master File (DMF) preparation, and regulatory filings across India and global markets. Significant regulatory milestones include:

• ANVISA, Brazil approval for Loxoprofen Sodium Dihydrate.

• NMPA, China approval for Loxoprofen Sodium Dihydrate.

• PMDA, Japan approval for Loxoprofen Sodium Dihydrate and Loxoprofen Acid.

• 21 DMF filings with regulatory authorities across the EU, Russia, Japan, South Korea, Iran, Jordan, Pakistan, and others.

• Ongoing DMF filings for Ketoprofen with the USFDA and Dexketoprofen Trometamol with Spain, Italy, Germany, and Slovenia.

As of the date of the Red Herring Prospectus, the company’s product portfolio includes 65 commercialized products, 28 at the pilot stage, and 49 at laboratory testing stage.

Manufacturing and Operations

Manufacturing operations are carried out at a facility located in Rajkot, Gujarat, spread across 5,059 sq. meters. The facility consists of two separate manufacturing blocks for intermediates and APIs, with an aggregate installed production capacity of 400 MTPA. It also houses four in-house laboratories, storage infrastructure, glass-lined and stainless-steel reactors (up to 4 KL capacity), filtration, centrifugation, and drying systems.

The manufacturing facility is regularly audited and approved by regulatory agencies and 33 international customers. Key accreditations include:

• ANVISA-Brazil audit approval with zero discrepancies.

• Accreditation of Foreign Manufacturer from PMDA-Japan.

• Approval from NMPA-China.

• GMP and WHO-GMP certifications for APIs.

• ISO 9001:2015 certification for management systems.

Research, Development, and Quality

The company operates through four testing laboratories focused on new generic API development, process optimization, and compliance testing. The Testing, Quality Control, and Quality Assurance team comprises 34 members, including 24 science graduates and postgraduates, who ensure strict adherence to customer requirements, regulatory specifications, and continuous process improvements.

Customers and Global Presence

Anlon Healthcare supplies products to domestic and international pharmaceutical companies, third-party dealers, and distributors. Exports cover 15+ countries, including Italy, Germany, South Korea, China, Argentina, Chile, Colombia, Mexico, Egypt, Turkey, Japan, Brazil, the UK, and the UAE.

For Fiscal 2025, 2024, and 2023, the company manufactured and sold 338 MT, 153 MT, and 316 MT of APIs and intermediates to 38, 39, and 48 customers, respectively. Export revenues amounted to ₹389.66 lakhs, ₹661.13 lakhs, and ₹1,202.62 lakhs, representing 3.24%, 9.93%, and 10.65% of total revenues. Domestic revenues for the same periods were ₹11,639.00 lakhs, ₹5,997.25 lakhs, and ₹10,085.13 lakhs, respectively.

As of June 30, 2025, the company had 105 employees (excluding trainees and including 4 contract workers). The Banker to the company is Punjab National Bank.

INDUSTRY ANALYSIS

Indian Pharmaceutical Industry

The Indian pharmaceutical industry holds a remarkable global position, ranked third largest in the world by volume and thirteenth by value. Known as the world’s leading supplier of cost-effective generic medicines, India contributes nearly 20% of global generic drug exports. This achievement stems from the country’s strong foundation in organic chemical synthesis and process engineering.

For almost three decades, until the amendment of the Patent Act in 2005, India followed a process patent system, which proved highly favorable for generic manufacturers. This framework allowed companies to launch low-cost alternatives to patented drugs through different manufacturing processes. Leveraging its skilled workforce, India excelled at reverse engineering innovator drugs, thereby establishing itself as one of the largest and most advanced generic drug markets worldwide.

The infrastructure developed during this regime enabled India to become a global leader in generic exports. Today, the country boasts the highest number of USFDA-approved facilities outside the United States, enabling seamless entry into regulated markets such as the US and EU.

India has also emerged as a vaccine powerhouse, accounting for 60% of global vaccine production. The nation supplies around 70% of WHO’s demand for DTP and BCG vaccines, nearly 90% of measles vaccines, and around 80% of antiretrovirals used globally for AIDS treatment. Such dominance in vaccines and life-saving drugs has solidified India’s reputation as the “Pharmacy of the World.”

Market Growth and Structural Shifts

The pharmaceutical sector has shown robust growth, expanding from INR 3,281 billion in FY 2021 to an estimated INR 4,741 billion in FY 2025, with a CAGR of 10%. While historically dominated by generics, the industry is now diversifying into biosimilars, biologics, and complex generics. The COVID-19 pandemic further reinforced India’s role, as it supplied affordable and high-quality medicines to over 200 countries.

Between FY 2021 and FY 2023, growth was driven by post-pandemic recovery, rising demand for essential medicines and chronic treatments, and government procurement under public health schemes. Exports of COVID-related drugs and increased approvals from USFDA and EMA also boosted performance.

From FY 2023 onwards, growth accelerated due to policy reforms and structural improvements. The Production-Linked Incentive (PLI) scheme encouraged local API manufacturing, reducing India’s heavy reliance on Chinese imports. At the same time, Indian pharma expanded into high-margin therapeutic areas like oncology and immunology, while continuing to thrive in North America, Africa, Latin America, and Southeast Asia.

On the domestic front, demand is rising due to increasing health awareness, higher insurance penetration, and rapid adoption of digital health platforms such as telemedicine and e-pharmacies, especially in Tier-II and Tier-III cities. Investments in CDMOs and clinical trials further highlight the industry’s push toward innovation and integrated healthcare solutions.

Pharmaceutical Exports

India remains the world’s largest exporter of generic formulations, supplying medicines to nearly 200 countries, including highly regulated markets like the US, EU, and Japan. While generics dominate, biologics and biosimilars are steadily gaining traction.

In FY 2025, pharmaceutical exports reached INR 2,048 billion, marking a 14% year-on-year growth. The US emerged as the largest export market, accounting for 40% of India’s pharma exports, followed by the UK, South Africa, France, and Canada. Collectively, these five markets represented over 50% of total exports.

However, the industry faced challenges in 2022 and 2023 due to quality control issues, including global controversies over Indian-made cough syrups linked to child fatalities. These incidents led to stricter scrutiny and damaged India’s image temporarily. In response, the government revised Schedule M of the Drugs and Cosmetics Rules, 1945 in 2024, aligning India’s quality standards with global regulatory norms. These reforms restored confidence, fueling strong export growth in FY 2024–25.

API Dependency and “China+1” Strategy

Despite being the third-largest producer of APIs globally (with an 8% market share), India remains 70% dependent on China for raw material imports. This vulnerability was exposed during the COVID-19 pandemic, when supply disruptions caused a surge in API prices. To counter this, the government launched initiatives like the PLI scheme for APIs and the Bulk Drug Park scheme, aimed at reducing dependence and strengthening domestic manufacturing.

Globally, the “China+1” strategy has gained momentum as pharmaceutical companies seek to diversify supply chains. India has emerged as the most viable alternative due to its skilled workforce, strong regulatory framework, cost competitiveness, and government support. This shift is expected to accelerate, positioning India as a preferred global hub for API manufacturing.

Competitive Landscape

India is home to over 10,000 generic drug manufacturers, though nearly half of the industry’s revenues are concentrated among 25–30 large firms. Domestic giants like Sun Pharma, Dr. Reddy’s, Lupin, Cipla, Aurobindo, Cadila, IPCA, and Natco dominate the generics market, while multinational innovators such as Pfizer, Gilead, Bayer, AstraZeneca, and Sanofi retain leadership in patented lifestyle disease drugs, where high R&D costs act as entry barriers.

Although Indian companies are yet to establish strong leadership in novel drug discovery, increasing investments in biosimilars, complex generics, and partnerships signal a gradual shift toward innovation. With the largest base of USFDA-approved manufacturing plants outside the US, India continues to hold a strategic advantage in exports to regulated markets.

Growth Outlook

Looking ahead, the Indian pharmaceutical industry is expected to reach INR 7,327 billion by FY 2030, growing at a CAGR of 10% between FY 2025 and FY 2030. Growth will be driven by the global patent cliff, which opens opportunities for generics, rising acceptance of affordable medicines in developed markets, and strong domestic demand fueled by aging demographics and lifestyle diseases.

The sector is also embracing digital transformation, with AI, big data analytics, IoMT, and blockchain being integrated into drug discovery, supply chain management, and patient care. Public health initiatives such as Ayushman Bharat and the National Digital Health Mission are further expanding access and affordability across underserved regions.

With these advancements, India is set to evolve from being just the “Pharmacy of the World” to becoming an innovation-driven, digitally integrated, and export-led pharmaceutical powerhouse.

BUSINESS STRENGTHS

1. Strong Product Portfolio and Scalable Business
Anlon Healthcare Limited is engaged in the manufacturing of pharmaceutical intermediates and active pharmaceutical ingredients (APIs) in compliance with pharmacopeia standards including IP, BP, EP, JP, and USP. The company is among the few manufacturers of Loxoprofen Sodium Dihydrate in India, a widely used API for the treatment of pain and inflammation linked to conditions such as rheumatoid arthritis, osteoarthritis, lower back pain, frozen shoulder, neck-shoulder-arm syndrome, dental pain, and post-surgical recovery.

In addition to intermediates and APIs, the company has commenced custom manufacturing services for complex and novel chemical compounds, tailoring processes to meet specific customer requirements, including the production of chemicals with enhanced purity levels. Deep domain expertise allows for reduction of impurities and implementation of advanced purification processes, giving the company a strong technical edge.

Regulatory approvals provide a strong competitive position:

• Brazil (ANVISA), Japan (PMDA), and China (NMPA) approvals for Loxoprofen Sodium Dihydrate.

• 21 DMF filings across the EU, Russia, Japan, South Korea, Iran, Jordan, Pakistan, and other markets.

• Ongoing filings for Ketoprofen with USFDA and Dexketoprofen Trometamol with Spain, Italy, Germany, and Slovenia.

The current product portfolio includes 65 commercialized products, 28 pilot-stage products, and 49 laboratory-stage products across pharmaceutical intermediates, APIs, nutraceutical APIs, veterinary APIs, and personal care ingredients. This diversified portfolio, supported by strong development capabilities, creates a scalable business model capable of serving both domestic and export markets.

2. Strong Promoters and Experienced Management Team
The company benefits from a qualified and dedicated management team led by its Board of Directors. The Promoters, associated since inception, have been pivotal in shaping operations, driving innovation, integrating advanced processes and technologies, and expanding the business.

The senior management team possesses extensive industry and operational expertise, enabling a specialized understanding of complex manufacturing processes for niche chemical products. Their strong customer relationships and entrepreneurial approach foster a culture of innovation and adaptability.

Regular in-house training initiatives in health, safety, quality management, and soft skills ensure continuous skill development of technical and operational staff. The combined experience and depth of leadership provide a sustainable competitive advantage, enabling the company to anticipate market trends, capture opportunities, and expand across domestic and global markets.

3. High Entry and Exit Barriers Due to Long Customer Approval Cycles and Strict Product Standards
The manufacturing of APIs and intermediates involves multi-step production and purification processes subject to stringent domestic and international standards. Customer approvals typically require:

• Extensive documentary submissions including DMFs, facility details, certifications, and compliance processes.

• On-site inspections by customer representatives or regulatory bodies to assess adherence to Good Manufacturing Practices (GMP), Quality, Environmental, Health, and Safety (QEHS) standards.

• Continuous audits to monitor compliance, quality consistency, and operational efficiency.

Given the high costs and time involved, customers are less likely to switch vendors, creating high entry and exit barriers. The manufacturing facility has been audited and approved by 33 customers, external consultants, and regulatory authorities, with no cancellation of orders to date. This strong compliance record ensures long-term customer retention and repeat business.

4. In-house Testing, Quality Control, and Quality Assurance (QA/QC)
Quality is maintained through rigorous testing and process improvements. The company is supported by four testing laboratories focused on new API development, process optimization, and regulatory compliance testing.

The QA/QC team consists of 34 professionals, including 24 science graduates and postgraduates, responsible for testing raw materials, intermediates, and finished products against customer requirements and global standards.

Key leadership roles in quality include:

• Sagar Senjaria – Manager, Product Development

• Chetan Raiyani – Head, Quality Control

During Fiscal 2025, 2024, and 2023, expenditures of ₹144.87 lakhs, ₹104.00 lakhs, and ₹86.30 lakhs, respectively, were incurred toward testing, development, and quality control. These investments have enabled the company to expand its portfolio from 10 commercial products in Fiscal 2018 to 65 in Fiscal 2025, reflecting strong R&D-led growth.

5. Focus on Quality, Environment, Health, and Safety (QEHS)
Maintaining high quality, efficiency, and safety standards is central to the company’s operations. Robust quality control systems cover every stage of manufacturing and product delivery.

The manufacturing facility is certified with ISO 9001:2015, GMP, WHO-GMP, and HALAL certifications. It operates as a zero liquid discharge facility, equipped with an in-house effluent treatment plant and multi-effect evaporator for wastewater management.

Commitment to environmental sustainability is further demonstrated through partnerships with third-party waste management companies including Aztec Recycling Hub Pvt. Ltd., Greenspace Enviro Services, Recycling Solutions Pvt. Ltd., and Ecocare Infrastructures Pvt. Ltd. for treatment, storage, and disposal of waste.

Employee well-being is prioritized through periodic health check-ups and safety initiatives, ensuring a safe and compliant work environment.

BUSINESS STRATEGIES

1. Expansion of Manufacturing Capacity to Meet Growing Demand
Anlon Healthcare currently operates a manufacturing facility at Survey No. 36/2/P2, Near Bharudi Toll Plaza, Gondal Road NH27, Sadak Pipaliya, Rajkot, Gujarat, with a total installed capacity of 400 MTPA, spread across approximately 5,059 sq. mts. In addition, an adjacent leasehold land area of 3,112 sq. mts. is utilized as a drum-yard and storage facility. To address the growing demand for core products, the company is in the process of setting up a new manufacturing plant on freehold industrial land at Survey No. 42/1/P2/P2, Village Pipaliya, Taluka Gondal, District Rajkot, Gujarat, admeasuring 4,958 sq. mts. The proposed facility will house both an intermediate block and an API block, with an installed capacity of 700 MTPA. This expansion will enhance the overall production capacity and enable the manufacture of both existing and new Pharma Intermediates and APIs.

2. Increasing Wallet Share with Existing Customers and Expanding Customer Base
Strong relationships with existing customers, built through consistent quality and timely delivery, provide opportunities to increase wallet share. Cross-selling potential within the current and future product portfolio offers additional growth prospects. Long-term collaborations, including early-stage support in customers’ product development cycles, further strengthen the position as a preferred supplier. Going forward, the focus remains on expanding the customer base by targeting multinational, regional, and local companies, while leveraging industry experience and a diversified product portfolio. The shift in global supply chains towards the “China+1” strategy, with India emerging as a cost-efficient market with robust technological capabilities, is expected to further benefit API manufacturers like Anlon Healthcare.

3. Expansion and Diversification of Product Portfolio
The product portfolio has expanded significantly from 10 commercialized products in Fiscal 2018 to 65 in Fiscal 2025. Building upon this growth trajectory, the strategy is to strengthen the existing portfolio while diversifying into products with high growth and profitability potential. Expansion into new segments, in addition to enhancing offerings in current business lines, is expected to cater to a broader set of customers across industries and geographies.

4. Improving Cost Management, Operational Efficiencies, and Rationalizing Indebtedness
Profitability improvement remains a core strategic focus through enhanced cost management and operational efficiency. Efforts are directed toward optimizing processes, improving production efficiency, and prioritizing high-value, low-volume products. As of March 31, 2025, outstanding loan facilities amounted to ₹3,301.66 lakhs. An estimated ₹500.00 lakhs from Net Proceeds has been earmarked for repayment or prepayment of borrowings, which will help reduce indebtedness, improve the debt-equity ratio, and free up internal accruals for reinvestment in business expansion. Strengthened financials will also enable access to future capital at competitive terms, supporting sustained growth and development initiatives.

5. Commitment to Health, Safety, and Environment (HSE)
Health, safety, and environmental sustainability are integral to business operations. Initiatives are aimed at minimizing environmental impact, ensuring a safe workplace for employees, contractors, visitors, and the local community, and promoting overall well-being. Continuous employee training fosters a culture of safety both within and outside the workplace. Manufacturing operations are aligned with efficient material and energy usage, substitution of hazardous materials where feasible, and optimized recycling practices. Compliance with applicable health, safety, and environmental regulations is ensured through continuous improvement measures, reinforcing a long-term commitment to sustainable and responsible operations.

BUSINESS RISK FACTORS & CONCERNS

1. Temporary Suspension of Manufacturing Operations
The manufacturing facility in Rajkot, Gujarat, remained non-operational for a period of four months during FY 2023–24 due to corrective actions and modifications required by the Brazilian Health Regulatory Agency (ANVISA). Although the facility successfully received Brazilian Drug Master File (DMF) approval for Loxoprofen Sodium Dihydrate without discrepancies, certain improvements in production, storage, and QC areas were mandated. The temporary shutdown significantly impacted production capacity, disrupted supply cycles, and adversely affected business operations and financial performance. Any similar shutdowns in the future could have comparable or greater consequences.

2. Risks of Contamination, Adulteration, and Tampering
Given the chemical and pharmaceutical nature of products such as APIs, pharmaceutical intermediates, nutraceutical APIs, personal care intermediates, and veterinary products, operations remain exposed to risks of contamination, adulteration, or tampering during manufacturing, storage, or transportation. Such events may compromise safety, efficacy, or compliance, leading to serious consequences such as regulatory penalties, product recalls, termination of contracts, reputational harm, and potential civil or criminal liability.

3. Dependence on Pharmaceutical Industry Demand
Revenue generation is significantly dependent on supplying pharmaceutical intermediates and APIs, which serve as raw materials for formulations across various product categories including tablets, capsules, ointments, nutraceuticals, personal care items, and veterinary products. Any decline in demand for these products, or obsolescence caused by new drug developments and alternative therapies, could materially impact revenue streams and growth prospects.

4. Revenue Concentration in Domestic Market
A substantial portion of revenue is derived from the Indian domestic market. Factors such as regulatory actions, increased competition, pricing pressures, changes in demand-supply dynamics, or unforeseen events like pandemics may adversely impact domestic sales. Inability to effectively mitigate these risks could result in significant adverse effects on financial performance, operations, and cash flows.

5. Geographical Concentration of Manufacturing Facility
All manufacturing operations are concentrated in a single facility located in Rajkot, Gujarat. This geographic dependence exposes the company to potential disruptions caused by political, economic, or weather-related factors, as well as natural disasters and other unforeseen events. Any such disruptions could lead to significant delays in production and product delivery, resulting in adverse financial and operational consequences.

6. Competition from Low-Cost Imports, Primarily from China
The Indian API manufacturing sector faces intense competition from low-cost imports, particularly from China, which accounts for nearly two-thirds of India’s API imports. The heavy reliance on Chinese imports poses risks of supply chain disruption, as witnessed during COVID-19, when shortages led to sharp increases in API prices. Such competition continues to place financial strain on domestic manufacturers and may impact market share and profitability.

Summary : 
Anlon Healthcare is exposed to multiple risk factors including operational disruptions from regulatory compliance, contamination and product quality risks, heavy reliance on pharmaceutical industry demand, concentration of revenue in the domestic market, dependence on a single geographic facility, and stiff competition from Chinese API imports. These risks collectively pose potential threats to production continuity, financial stability, and long-term growth prospects.