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Pfizer Ltd.

BSE: 500680 Sector: Health care
NSE: PFIZER ISIN Code: INE182A01018
BSE LIVE 10:29 | 20 Nov 1932.00 3.80
(0.20%)
OPEN

1950.00

HIGH

1950.00

LOW

1930.00

NSE 10:16 | 20 Nov 1935.60 1.30
(0.07%)
OPEN

1943.60

HIGH

1943.60

LOW

1930.00

OPEN 1950.00
PREVIOUS CLOSE 1928.20
VOLUME 431
52-Week high 1999.00
52-Week low 1625.00
P/E 30.74
Mkt Cap.(Rs cr) 8,839
Buy Price 1932.10
Buy Qty 5.00
Sell Price 1938.70
Sell Qty 5.00
OPEN 1950.00
CLOSE 1928.20
VOLUME 431
52-Week high 1999.00
52-Week low 1625.00
P/E 30.74
Mkt Cap.(Rs cr) 8,839
Buy Price 1932.10
Buy Qty 5.00
Sell Price 1938.70
Sell Qty 5.00

Pfizer Ltd. (PFIZER) - Director Report

Company director report

Including Management Discussion and Analysis

TO THE MEMBERS

Your Directors take pleasure in presenting this 66th Annual Report alongwith the Audited Financial Statement for the financial year ended March 31 2017. TheCompany operates only in one business segment viz. "Pharmaceuticals" and thisReport covers its Pharmaceutical business performance.

DIVIDEND

Your Directors recommend a normal dividend of Rs. 15.00 (150%) per equity share and aspecial dividend of Rs. 5.00 (50%) per equity share on account of exceptional incomeaggregating to total dividend of Rs. 20.00 (200%) per equity share for the financial yearended March 31 2017. The dividend payout will be Rs. 9150 Lakhs and the dividenddistribution tax payable by the Company would amount to Rs. 1863 Lakhs. This aggregatesto a total dividend outgo of Rs. 11013 Lakhs.

FINANCIAL HIGHLIGHTS

Rs. in Lakhs
Year ended March 31 2017 Year ended March 31 2016
Revenue from Operations (gross) 204193.14 209376.02
Other Income 10116.32 8699.00
Profit Before Exceptional Items and Tax 38640.44 46053.65
Exceptional Items (Expenses)/Income 13043.45 988.65
Profit Before Tax 51683.89 47042.30
Less: Taxation
Current Tax 18866.43 18780.84
Deferred Tax (Credit)/Debit (860.90) (2236.67)
Profit for the year 33678.36 30498.13
Total other comprehensive income (net of tax) (390.86) 104.07
Total comprehensive income for the year 33287.50 30602.20

Your Company's sales for the financial year ended March 31 2017 was Rs. 201726.40Lakhs as compared to Rs. 207160.03 Lakhs in the previous year which represents a declineof 3%. The revenue for the financial year was impacted mainly on account of externalregulatory factors like impact of price control notifications pursuant to the revision tothe National List of Essential Medicines and other internal strategic decisions like (i)the decision to discontinue manufacturing of Corex Cough Syrup (Chlorpheniramine Maleate +Codeine Phosphate); (ii) sale of four products to Piramal Enterprises Limited and (iii)transition of certain products consequent to expiry of License Agreement.

Profit before tax and exceptional items for the financial year ended March 31 2017 wasRs. 38640.44 Lakhs as compared to Rs. 46053.65 Lakhs in the previous year recording adecline of 16% mainly on account of the external regulatory factors and internal strategicdecisions as stated above. Income from exceptional items of Rs. 13043.45 Lakhs for theyear under review includes income from sale of four products of Rs. 10346.21 Lakhs andincome from sale of premises of Rs. 2697.24 Lakhs.

Your Company achieved a Net Profit of Rs. 33678.36 Lakhs for the financial year endedMarch 31 2017 as compared to Rs. 30498.13 Lakhs in the previous year registering anincrease of 10%.

Indian Economic Overview

The Indian Economy has seen certain fundamental structural changes in the past 18months viz. demonetization and implementation of Goods and Services Tax (GST) which yourCompany believes will make a positive impact in the long run. While demonetization isexpected to foster a more transparent and digitized economy the implementation of GST isexpected to benefit most sectors by making the taxation process easier as it replaces thecurrent regime of multiple taxes and duties. These structural changes are expected tofundamentally improve the ease of doing business transparency and compliances in thebusiness operating environment.

While these changes will bring about long term gains and efficiencies the industry iscurrently coping with significant short term challenges posed during this transition phaseviz. sluggish offtake from wholesalers / retailers and ambiguous regulatory provisionsaround the overall implementation. Uncertainties in the operating environment haveimpacted the trade leading to significant impact on sales and earnings across industries.

In spite of these short term challenges India is expected to emerge as the fastestgrowing major economy in the world with a projected annual growth of 7.5% in 2017-18.@Private consumption is expected to increase with a rise in public wages and pensions andon account of higher agricultural production which will be an outcome of a predicted goodmonsoon. It is expected that the reforms by the Government will enable the country toperform better compared to its peers over the medium and long term. Private investmentshave been low in the last year but are expected to gradually revive as some sectorsstabilize in output infrastructure projects mature banks clean up their bad debts andthe implementation of GST.

Indian Pharma Industry

(i) Overview

The short term impact of demonetization has resulted in a slowdown of industry growthto 9.1%. Of the 9.1% growth seen in March MAT 2017 period new introductions (or productsthat have been launched in the last 24 months) have contributed 5% while volumescontributed 2.5% and price increases have added 1.6%. Growth across most therapy areashas been in the range of 9-10%. However "Lifestyle"/ Chronic related TAs haveshown higher growth such as Anti-diabetics at 17% Dermatology at 16% Neurology/Central Nervous System at 11%. The largest therapy area within the IPM Anti-Infectiveshas seen slow growth of 5% this year primarily on account of pricing regulations andFixed Dose Combinations (FDC) issue*.

The Indian Pharmaceutical Market (IPM) is expected to grow at a CAGR of about 12% till2020 and is expected to surpass the growth of the global pharma industry pegged at anannual rate of five per cent in the same period. The IPM growth is slower than itshistorical CAGR of about 14% (2010-2015). The IPM is expected to grow to $55 billion by2020 thereby emerging as the sixth largest pharma market globally by absolute size#.

This year the government released the National Health Policy 2017 with multipleobjectives right from strengthening primary care services while ensuring improved accessand affordability of quality secondary and tertiary care services to significantlyreducing out-of-pocket expenditure and proportion of households experiencingsignificant health expenditure. Although the said Policy stipulates a commendable reformagenda and proposed increasing public spending on healthcare from 1% to 2.5% of GDP by2020 the Budget for FY 2016-17 has not significantly increased resources for thehealthcare sector. Public resources invested in healthcare continues to be low andinequitably distributed across the country. The policy indicates the Government's intentto provide universal access to free medicines. While this is an ambitious intent the roadto achieving this is riddled with gaps on access related challenges. Your Company believesthat an innovative approach of bridging the access gap is that of "TieredPricing" and simultaneously strengthening other pillars of access such as heighteneddisease awareness access to physicians and healthcare facilities. Your Company has been astrong proponent of this approach that will also enable a more sustainable access modelacross populations in India.

The government has rolled out a unified Goods and Service Tax (GST) across the countryeffective July 1 2017 in line with the concept of "One Country One Tax". Thisis a significant change from the existing tax structure where the right to levy taxes aredivided between Union Government and the State Governments. The Company welcomes thischange as it expects a unified tax structure to improve ease of doing business makecross-country logistics easier and to provide an overall boost to the tax compliance.

This introduction is expected to boost consumption and spur manufacturing as savingsare expected in a number of household items. While certain life-saving medicines have beenplaced in the lower GST slab of 5% for other pharmaceutical medicines the GST has beenpegged at 12% from an existing effective total tax rate of about 9%. The increase in taxrates is expected to be partially offset by savings on account of input tax credit andother operational savings. While the National Pharmaceutical Pricing Authority has allowedthe companies to take price increase on scheduled formulations to the extent of increasein the tax rate your company intends to take an increase of approx. 1% after consideringthe available tax credit and other operational savings. While the GST implementationresulted in an increased tax incidence your Company has maintained the MRP for itsnon-scheduled formulations which constitutes approx. 85% of its portfolio. Your Companyhas maintained the MRP on the inventory on hand as on the date of implementation of GSTin order to ensure that the products of the Company continued to be available to thepatients at the same price.

Your Company had also extended discounts and credit facilities to the trade to avoidany shortages of medicines in the supply chain.

Source:

@ Central Statistics Office Report

* IMS TSA MAT MAR 2017

# IMS Prognosis Report Q3 2016

(ii) Operating Environment

The pharmaceutical industry is perhaps among those that continue to face the mostvolatile and uncertain operating environment in India. The industry continues to witnesspolicy uncertainty and ambiguity that impact the business environment whether it's thecompanies' ability to price their products labeling norms regulations aroundprescription of medicines etc. Each of these and more are fundamental operatingconditions for pharmaceutical manufacturers to be able to meet the growing need of thehealthcare sector. Some of the recent key industry challenges are summarized below:

1. Ban on Fixed Dose Combinations (FDCs): Last year the Government announced aban on approx 350 FDCs. While the Company supports the intent of the Government in takingaction against unsafe and irrational pharmaceutical products that have not received dueapprovals by the central and state drug regulators concerns have been raised on includingproducts that have received all requisite approvals as also on the process followed toarrive at the list. Post this ban your Company challenged the ban in the Hon'ble DelhiCourt and obtained an interim injunction. In December 2016 the Hon'ble Delhi High Courtset aside the said notification banning the FDCs. The government has recently filed anappeal against the judgment staying the FDC ban and the matter is currently pending beforethe Supreme Court. The ban and the litigation that followed did see a negative impact onthe Industry.

2. MCI Guidelines on generic prescriptions: The Medical Council of India hasissued a notification directing physicians to prescribe drugs with generic molecule names.This shift in dynamics of dispensing may result in confusion among consumers retailersand increased concerns around the quality of medicines.

3. Pricing policy and implementation: During the year under review yourCompany has witnessed a series of price notifications pursuant to revision to the NationalList of Essential Medicines (‘NLEM') along with price reduction for negativeWholesale Price Index (‘WPI') which impacted its revenue. Unpredictable expansion ofthe price control continues to remain the single most significant challenge for theIndustry.

4. Implementation challenges on Goods and Services Tax (‘GST'): Theintroduction of GST effective July 1 2017 has posed short term implementation challengesmainly on account of ambiguous regulatory provisions around the anti-profiteering rulesand lack of clarity on consequent price changes.

As a consequence of these and other business environment challenges there has been aslowdown in the IPM growth more so the average quarterly growth of 14-15% has nowdropped to ~6% for the last 2 quarters (i.e. Oct 2016 – Mar 2017)*.

While the year under review witnessed several operating challenges your Companycommends the positive developments in the regulatory environment viz.

1. New Regulations on Clinical Research: The Board of Health (BoH) hasinitiated certain steps to the shape regulations that would effectively control andpromote the conduct of clinical research in the country. The BoH has released newregulations to ensure that adequate responsibilities are absorbed by the SponsorsClinical Research Organizations Ethics Committee and investigators.

2. Additional requirement for Bio-availability/Bio equivalent studies :While applying for manufacturing licenses from state licensing authoritiesBio-availability/Bio equivalent study results are required to be submitted based onBiopharmaceutical Classifications System for class II and IV. This will help in ensuringavailability of efficacious medicine to patients.

3. Risk based inspection and self-assessment for GMP compliance: BoH hasissued a Biopharmaceutical classifications system check list for self-assessment ofmanufacturing plants and to submit the same to licensing authorities on annual basis. BoHwill adopt a preferential approach for GMP inspection based on self-assessment reports.

4. Steps towards acceptance of electronic submission: Government has takensteps to accept electronic submission of various categories of application like importregistration clinical trials Fixed Dose Combinations and supplemental New DrugApplication medical devices and cosmetic etc. This has helped in streamlining review andapproval process at BoH and also resulted in reduction of approval timelines.

Historic performance of the Indian pharmaceutical industry shows that the industrywould still face concerns on the growth which may get impacted due to policy andregulatory challenges. Though there would be a short term setback the Industry isexpected to bounce back given the strong fundamentals of the Indian economy.

Source:

* IMS TSA MAT MAR 2017

REVIEW OF OPERATIONS:

During the year under review your Company re-aligned its strategy to shape theorganization to address the needs in a customer centric go-to-market strategy andto deliver market beating growth. Accordingly the commercial teams were restructured tobring product portfolio and channels together while maintaining a high therapeutic area(TA) focus. The Company also initiated enhanced digital marketing capabilities to engagethe customers effectively. Simultaneously your Company formed a specialized marketingfunction that will be able to drive innovative marketing solutions and strategies forsuccessful execution of the customer facing business model.

In conjunction with realignment of the organizational structure your Company alsobrought on board key leadership members to build future capabilities. With a diverse andrich experience in leadership and business management they bring with them competence todrive your Company towards its vision for growth.

Your Company as part of the growth plan also focused on the expansion and review of thecurrent portfolio leading to the following strategic developments:

i. Acquisition of the brand "Neksium" from AstraZeneca AB Sweden. This willenhance your Company's presence in the Gastro Intestinal therapeutic area.

ii. Pursuant to a global agreement between Pfizer Inc. and AstraZeneca PLC Meronem IVInjection was transitioned to your Company. Meronem compliments and enhances yourCompany's Anti-Infectives portfolio.

iii. Your Company undertook a thorough review of its respiratory portfolio with anobjective to launch new products that would leverage the equity of our flagship brandswhile discontinuing those that did not align with our portfolio. Consequent to this thedecision to discontinue the manufacturing of its Corex Cough Syrup (ChlorpheniramineMaleate + Codeine Phosphate) was taken; and introduced Corex T (Triprolidine Hydrochloride1.25mg & Codeine Phosphate 10mg) a new offering that will better address patient andPhysician needs.

iv. Sale of four products viz. Neko Soap Sloans Ferradol and Waterbury's Compound toPiramal Enterprises Limited.

Your Company operates through the following six commercial teams and has 12 of itsproducts in leadership position in their represented product markets.

1. Vaccines:

• Your Company continues to enjoy leadership position in Pneumococcal VaccinesMarket with a market share of 59.6%. Prevenar13 is our pneumococcal conjugatevaccine for the prevention of pneumococcal disease in children between 6 weeks to 5 yearsand adult above 50 years of age. Overall revenue of Prevenar13 recored a 4 year CAGRgrowth of 25.4% (2014 -2017) strongly driven by private market uptake in pediatric &adult segments. Prevenar13 is currently no. 1 vaccine in Indian vaccine market with 15%market share*.

• The Vaccines team continued to conduct various scientific educational andawareness programs that provides value to healthcare professionals.

• Your Company undertook various innovative initiatives for educating stakeholderswhich included training of upcoming speakers to enhance scientific knowledge and softskills educating nurses on importance of Pneumococcal disease prevention through‘Nurture the Nurses' program engaging Company's wholesalers on the importance ofcold chain best practices through campaigns. Your Company collaborated with Indian Academyof Pediatrics on their initiative ‘ImmunizeIndia' to improve the vaccine complianceamong children.

• Prevenar 13 has been selected for India's immunization program. The multi-dosevial used for this program has been specifically created by Pfizer Inc for such massimmunization settings. The vaccine will be supplied directly by Pfizer Inc. throughUNICEF under the auspices of the Global Alliance for Vaccines and Immunizations(‘GAVI') to the Government of India.

2. Inflammation and Immunology (‘I&I'):

Your Company is ranked 3rd in the biologics market in India.#

Enbrel (Etanercept) ranked 3rd in Indian Biologics market is your Company's innovatorbiologic prescribed for patients with rheumatoid arthritis ankylosing spondylitispsoriatic arthritis juvenile idiopathic arthritis and psoriasis who are intolerant toDMARD

(Disease modifying anti-rheumatic drugs like methotrexate) therapy. In August 2016 weintroduced Xeljanz the first ever oral therapy with a new patented molecule (Tofacitinib)that is approved for the treatment of adult patients with moderate to severe activerheumatoid arthritis with inadequate response or intolerance to methotrexate. Healthcareprofessionals have welcomed this new innovative oral therapy yet being new it will taketime to become the preferred biologic for this indication.

Source:

* IMS TSA MAT MAR 2017

# IPSOS Market Research MAT DEC 2016

The I&I team continued to conduct scientific educational and awareness programsthat would provide value to healthcare professionals highlighting recent advancesparticularly in the management of diseases like rheumatoid arthritis and ankylosingspondylitis.

3. Consumer Healthcare:

For the year under review initiatives were undertaken by the Consumer Healthcare teamto enhance the distribution coverage into smaller towns in select states. The teaminitiated campaigns to drive in-store visibility for Anne French & Anacin. Mediacampaigns were rolled-out to enhance brand equity current user base retention and growthin key markets.

4. Primary Care focuses on a broad range of products that requires adifferentiated route to market and competitive intensity. The Respiratory Pain and Tradeteam portfolios form part of this segment.

(i) Respiratory team

• Your Company's Respiratory portfolio is ranked 3rd in the representedmarket. The flagship brand Corex Dx continued its leadership position with 46.3% marketshare (within molecule) and 30.8% growth. The brand also registered a robust 38.9%*prescription growth. The team continued physician education programs focusing on cough andasthma management with new insights.

• Your Company successfully launched Corex T (Triprolidine Hydrochloride 1.25 mg& Codeine Phosphate 10 mg/ 5 ml) Cough Syrup in December 2016 as part of itsorganic growth plan. Within four months of its launch Corex T achieved 72% market sharewithin its molecular segment*.

(ii) Pain team

• Your Company's Pain portfolio is ranked 6th in Non-Steroidal AntiInflammatory Drugs (NSAID) market. Major brands under this portfolio include Dolonex andDalacin C; both leading with 77.6% & 64.8% market share respectively in their moleculesegments*. To leverage growth opportunities in targeted segments the Pain Management teamhas implemented scientific initiatives like:

• An innovative digital engagement platform "Digital Gurukul - Know YourRoots" for dentists

• ‘Go Active' mobile application and launch of mobile Wi-Fi clinics

(iii) Trade team

• With an endeavor of retaining continued market leadership through our majorbrands like Becosules & Gelusil the team initiated innovative HealthcareProfessionals (‘HCP') engagement and retail engagement activities for ensuring higherrepeat consumer purchases. For HCP engagement a series of multi-center ‘Hub andSpoke' webinars were conducted for Nutrition range products and engaging doctors throughphysical meetings and digital reach. Roll outs in new indications and high potentialspecialties helped maintain a high ‘Share of Voice' on major brands and driveprescription growth.

• Becosules continued its market leadership with 63% Market Share withprescription growth of 7% and prescriber growth of 3%*.

• The team drove high potential usage promotion for Gelusil and multi-channelmarketing e-mailers to expand the reach to General Physicians and Chest Physicians.Gelusil retained its market leadership with 26.5% M.S. in the highly cluttered antacidcategory with a good prescription growth of 12%*.

• To ensure adequate retail availability a series of innovative ‘TradeSchemes' retail sell out activities were implemented for Becosules and Gelusil followed bychemist awareness programs.

5. Specialty Care focuses on products that require therapy area expertiseand synergies. The Women Healthcare Cardio-Vascular Central Nervous System andOphthalmology portfolios form a part of this segment.

In order to further optimize the benefits of stronger teams and a compelling productportfolio your Company formed Chronic Care - a consolidation of CNS and CV teams withinthe Specialty Care segment. This consolidation brought together the ability andopportunity to engage with a wider set of healthcare practitioners and offer a broaderproduct portfolio.

Source:

* IMS TSA MAT MAR 2017

(i) Women Healthcare (WHC) Team

• Women Healthcare continues to be one of the most significant therapy areas foryour Company. Your Company's products within this portfolio feature amongst top 3 brandsacross key categories namely contraceptives folic acid supplementation and MenopausalHormone Therapy.

• With the aspiration to be the market leader in this therapeutic area the womenhealthcare was structured under two distinct business models namely MaternalHealth and Hormonal Health. The Maternal Health includes wellness gynaec contraceptivesand intimate hygiene. The Hormonal Health includes menstrual disorder menopause and otherhormonal products including hormonal contraceptives.

• Your Company is constantly evaluating its portfolio and has penetrated themarket with new products and line extensions. Product Life Cycle (PLC) initiatives toenhance treatment compliance duration and indication roll outs for efficient andeffective usage helped drive volumes for brands like Folvite Folvite MB and Mucaine.Despite being impacted by pricing regulations during the year under review Folvitecontinues to be the market leader with 14.6% market share. In-clinic promotion ofMucaine was strengthened through the digital initiative to maintain high brand visibility.Mucaine Gel continues to be the market leader with 17% market share and is also themost prescribed brand in Liquid Antacids category*. Becosules Women a line extension ofBecosules launched in December 2015 has performed well in the highly fragmentedmultivitamin market comprising more than 500 brands.

• WHC focused on driving volumes through prescriptions by enhancing scientificengagement with physicians through sustained medical education programs. The teamcollaborated with FOGSI (Federation of Obstetrics & Gynecological Societies of India)and IMS (Indian Menopause Society) to conduct several meetings aimed at busting mythsassociated with long term hormonal use and providing Gynecologists and Physicians anopportunity to interact with key opinion leaders. Twenty five InfOCons (Informative OralContraceptives Conclaves) were conducted pan India involving more than 1100Gynecologists. Being the leader in the contraceptive market with 26.8% market shareeducating patients and encouraging them to take an informed decision on contraception inconsultation with their doctor continues to be a focus area for your Company*.

(ii) Chronic Care team

• The Company's Neuroscience portfolio is ranked 6th in the Indian Neurosciencemarket. Major brands like Ativan Pacitane and Daxid are leaders in the respectivetherapeutic category (molecule segment). Despite being impacted by the pricingregulations Ativan (Lorazepam) continues to be No. 1 anxiolytic brand in thebenzodiazepine tranquillizer market with 12.5% volume growth. The volumes were primarilydriven by the new promotion viz. "Safety in Maniac Depressal Disorder(‘MDD')/Anxiety patients with co-morbid alcohol use". Another original researchdrug Daxid the No. 1 brand amongst sertraline segment registered 15.3% growth*. Newcommunication was developed highlighting unique benefits to improve "EnergyMotivation and Interest in pleasurable activities" in patients with MDD. As part ofyour Company's continuous medical education programs the Neuroscience team sensitizedmore than 1500 psychiatrists on recent updates/events in psychiatry through multipleinnovative digital and scientific engagements.

• The Cardiovascular team operates in the anti-hypertensive segment with itsflagship brand ‘Minipress XL' the second largest brand in the category leadingthrough a series of therapy shaping programs in collaboration with International andIndian Societies. The major initiatives during the year were:

• Development of protocol for treating hypertension in patients with chronickidney disease in collaboration with the Association of Physicians of India (API)

• Generated newer evidence by publishing review article on Alpha-blockers in JAPI(Journal Association of Physicians of India)

• Educational initiatives for physicians to bridge the gap between Guidelines andClinical practice in partnership with American College of Cardiology (ACC)

• Partnered with Medical Colleges in India to educate young Nephrologists

6. Critical Care focuses on Hospitals and Nursing homes as prime customersof our Critical products and Sterile Injectables Anti-Infectives portfolio which forms apart of this segment.

Anti-Infectives

• Your Company ranked 5th in the hospital segment with a wide portfoliocovering categories across critical care segment leads the market in 6 out of the 9molecules in the portfolio. This position has been built over the years through scientificengagements and strong medical advocacy.

Source:

* IMS TSA MAT MAR 2017

• Your Company has further strengthened this position with the strategy ofestablishing "Leadership in Hospitals" through segmentation of the market andkey institutions to ensure optimal focus. For the year under review the team designedinterventions with strong scientific engagement to address needs of each segment andachieve competitive advantage by:

• Working with leading healthcare institutions to increase the Infectious Diseaseexpert base through a Fellowship program

• Connecting small hospitals / nursing homes to select Centres of Excellence forthe dissemination of best practices in the field of infection control

• Working with leading institutions across multiple aspects of HealthcareLeadership

• The recent acquisition of ‘Meronem' under this segment is expected tofurther strengthen the Company's position in this segment.

Multi-Channel Marketing:

Your Company has pioneered several digital initiatives towards enhancing customerengagements and providing result-driven outcomes. This year too several of ourinitiatives have achieved its desired outcomes. The Rep-Triggered-Email (RTE) campaign andother digital initiatives have received great support and feedback from HealthcareProfessionals (HCPs) and other stakeholders. A total of approx. 18000 doctors registeredon the multi Therapy Area HCP portal – Inquimed and our webcasts including the Meetthe Expert (MTE) have seen attendance of approx. 9000 doctors across different productteams.

MANUFACTURING OPERATIONS:

Your Company continued to deliver products to improve patient health and contributetowards creating a healthier world.

Your Company understands that its products impact millions of lives across the Country.At the core of our Manufacturing and Quality Operations are the people who are one of thecore pillar of a patient focused company.

The Company has various levels of stringent quality control systems starting from localquality assurance to global quality audits and approvals that ensure that the samestandards of quality are followed across Pfizer worldwide.

The Company's continued emphasis on conservation of resources and reduction of wasteacross manufacturing sites has created an excellent model for environmentalsustainability. As the new economic environment requires high quality cost effectiveprocesses your Company endeavor to ensure that this forms an essential part of ourproducts and manufacturing processes.

The Company has a state-of-art and award winning manufacturing facility at Goa thatmanufactures products with the most stringent global quality standards. Besides complyingwith Schedule M of the Drugs and Cosmetics Rules 1945 the site holds ISO 9001 and WHO GMPaccreditation. The site has a Formulation Development Cell that caters to the productenhancement and technology transfer needs of our market. The Plant strictly adheres toGlobal Safety environmental Health and Hygiene norms and has received a number ofcorporate awards. The site also holds accreditation of ISO 14001 & OHSAS 18001. ThePlant was the recipient of "FUTURE READY (GOLD) AWARD" in 2016.

In addition to Goa plant our manufacturing operations are strengthened by a pan Indianetwork of manufacturers having the requisite technologies to enhance our productportfolio thereby partnering our growth and supporting our goal of meeting the demands ofthe health care industry. All manufacturers adhere to Pfizer's global standards ofquality compliance and environment health and safety norms. All thesemanufacturing sites periodically undergo audits by Pfizer Global teams.

We understand that in any society good health is vital to all and finding innovativesolutions to the healthcare challenges is paramount within Pfizer. We at Pfizer arecommitted to being global leaders in health care and help to change millions of lives byproviding access to Safe Effective Quality medicines.

Environment Sustainability

Your Company is conducting systematic audits across all the manufacturing facilities(Contract Manufacturing and Own Manufacturing) to assess environmental compliance andimpact. This is with added focus on our antibiotics manufacturers and suppliers. GlobalExperts have been engaged with a purpose of educating suppliers and contractors across thecountry and also to ensure that our partners do not adversely impact the environment inany way.

Energy Conservation

Goa Site initiated the replacement of conventional CFL/Halogen/Tube lights by LEDlightings in a phased manner to conserve energy. Manufacturing Process were modified forsome of our products to eliminate high electricity consuming Fluidised Bed Processoroperation.

Further increased capacity utilization initiatives were implemented in Goa Plant tooptimize energy usage and to protect environment. Other initiatives like EHS leaderworkshop and ‘Near Miss' program were conducted at the site to strengthen EHS cultureand promote injury free Pfizer.

Quality

Product quality is ensured in every aspect of the manufacturing. Input materialcontrol various routine monitoring and oversight controls ensure that the productmanufactured at any location meets the required Pfizer Quality Standards over the entirelife cycle of our products. All suppliers of input materials and our ManufacturingPlants undergo periodic on site audit by Pfizer global quality team to ensure eachfacility meets Pfizer Standards.

Specific Areas for Further Enhancing Quality

The specific focus areas this year are sustaining Quality and meeting Pfizer StandardsData Integrity Assessment and upgrading overall Quality Compliance. Root Cause Analysis isalso done to ensure robust quality system. To further improve on quality and complianceproactive preparation for regulatory inspections anticipating changes and aligning withglobal regulatory trends for all the manufacturing sites is being carried out.Additionally enhancing systems for early detection of potential Quality concerns are thecurrent focus areas.

Human Resource/ Industrial Relations / CSR

a. During the financial year under review your Company entered into an settlementagreement with the independent union at Goa plant.

b. Goa Site rolled out "No Dust and No Rust" initiative for the colleagues toOWN cleanliness of their own area and ensure dust and rust free environment.

c. Site created sanitation facilities for two schools in Goa under Pfizer's Doing Goodinitiative.

In September 2015 the Company entered into a Business Transfer Agreement (BTA) fortransfer of the Company's manufacturing facility at Thane as a going concern. The BTA willbe concluded upon receipt of all necessary approvals.

MEDICAL AFFAIRS DIVISION:

The Medical Affairs Division through its various scientific engagements with healthcareprofessionals supports all business units and works towards creating scientificpartnerships with stakeholders beyond Key Opinion Leaders through various strategicinitiatives

The General Physicians Education Program: Your Company's medical affairsteam continues to be a knowledge partner for General Physicians by providing relevantinformation including latest evidence and treatment trends for common clinical conditionsseen in their practice. This year too the medical team initiated a series of face-to-facewebinars on "ECHO' (Education to EnhanCe Physicians' Clinical Outcomes) where thesephysicians engaged with experts in their respective therapy areas that provided them withcertifications through accreditation bodies thereby improving their patients outcomes. Theprogram aims to engage approx 6000 GP's in 2017.

Menopause awareness education program in partnership with Indian MenopauseSociety: Understanding from the unmet need of ‘Menopause Awareness' amongGynecologists and their women patients your Company launched ‘MASS Initiative' (MenopauseAwareness through Series of educational Sessions) in partnership with Indian MenopauseSociety (IMS). This initiative involved an accredited educational module from IMS focusingon Menopausal Hormonal Therapy Management and practical prescription experience throughlive sessions. The Program aims to engage approx 1200 Gynecologists in 2017.

Physician association partnership: Your Company has created strongscientific partnership with physician associations such as FOGSI (Federation ofGynecologists and Obstetricians in India) and International Menopausal Society (IMS)towards conduct of Continuing Medical Education programs with the aim of busting the mythsaround contraception and hormonal therapy. Your Company was acknowledged by FOGSI as aknowledge partner in this initiative in their annual newsletter

Young Specialists Program: Your Company's Medical team launched a"Young Doctors Program" which is a multipronged education initiative involvingwebinars on case discussions involving experts from reputed Institutes and alsodeveloping treatment algorithms in trauma management and infectious diseases forSpecialists with less than five years of experience in clinical practice. This initiativeaims to benefit over 5000 Doctors across multiple disciplines.

Antimicrobial Resistance Education Program for Nursing Homes: To combatthe emergence of Antimicrobial resistance at the grass root level the medical teamlaunched a "Meet The Expert- Institute Connect" program to train Nursing homephysicians in tier 2 and 3 cities on the concepts of Anti-microbial stewardshipand Infection control. Experts in Infectious Diseases management from four Centers ofExcellence across the country are connected to multispecialty doctors in Nursing Homesevery two months through a series of continual digital webinars. This initiativeaims to benefit over 1000 doctors across 50 peripheral Nursing Homes.

Digital Continual Medical Education (‘CMEs'): To scale up ourphysician reach in a cost effective way our Company has developed a unique format ofdigital CMEs called "Meet The Expert" in partnership with commercial andbusiness strategy team using an in-house HCP portal called ‘Inquimed'. Till date morethan 6000 physicians have benefitted through these programs. This unique model has beenadopted as a best practice in other countries within the Pfizer APAC region.

The Retail pharmacy education program: With an objective of engagingpharmacists to upgrade their knowledge your Company's Medical Division conductededucational programs to create a shift in the approach from a product oriented to apatient oriented professional. Another interesting initiative undertaken was‘‘STEP – UP' (Structured Training to Educate Pharmacists – UPskill)for retail pharmacists on accredited educational modules from IPA. Through hybridengagement models these programs aim to engage approx. 5000 retail pharmacists both fromorganized pharmacy chains and unorganized standalone retail outlets throughout the year.

PneuMasterclass: With an objective to develop new speakers asadvocates for pneumococcal disease and prevention the vaccines medical team conductedPneuMasterclass (Train the Trainer Program/ Speaker Development Program) in a span of 30days training around 80 pediatricians for 2 days across 5 cities who in turn wouldcascade the key messages and information to their peer group on the importance ofpreventing pneumococcal disease in children in the country.

The Medical team partnered and provided effective medico-marketing support in conductof this program. An innovative approach of better Customer Engagement & Patientoutcomes with efficiency was demonstrated by bringing all important stakeholders together.

HUMAN RESOURCES ("HR")

Your Company's strategy for People and Human Capital development was focused onsupporting business growth through career architecture implementation for the field forcea simplified organizational structure and investment in technology. Your Company alsocontinued to drive leadership development an integrated talent management approach andOWN IT! culture.

Sales Career Architecture

To balance organizational objectives field colleagues' potential and aspirations yourCompany developed a structured framework / career architecture. This framework provides awell-thought out growth path through vertical and lateral opportunities that empowers eachfield colleague and manager to take charge of their career. The architecture articulatesclear direction and choices both within the sales function as also in other alliedfunctions like marketing supply chain training etc.

Organizational structure

Your Company's customer facing business teams were restructured to ensure greaterfocus on customer and therapy areas enhance marketing efficacy and provide a clearline of leadership.

Investment in technology

With the guiding principle that leaders' ownership of talent is critical to enhancingcolleague engagement your Company has invested in technology that supports greaterownership for managers. A widely used cloud based HRIS system – WorkDay – hasnow replaced the existing platform. This project called "HR on Demand"provides a digital platform to colleagues and managers for independent seamless interfaceto cover an all employee life-cycle events in one platform.

• Leadership

• Your Company launched a unique framework for leadership development using theHead Heart & Guts approach a Pfizer Inc. initiative. This is a holistic leadershipframework that supports leaders in delivering strategic goals while engaging colleaguesand taking appropriate risks.

• Your Company's growth is fueled by an enthusiastic team of 2156 field forcecolleagues who communicate the value proposition of our products to healthcareprofessionals. To ensure continuous engagement and training for a widely spread fieldforce your Company continues to use differentiated technology enablers including virtualclassroom training and mobile applications to drive anytime-anywhere learning.

PREVENTION OF SEXUAL HARASSMENT POLICY

The ‘Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013' ("the Act") seeks to protect women colleagues againstsexual harassment at their workplace. A specially-designed online course was rolled out tohelp all colleagues and contingent associates to understand what constitutes sexualharassment at workplace and how to address it; as well as the organization's role inpreventing it. During the financial year under review one complaint was received and thesame was duly attended to in accordance with the Act.

LEGAL DIVISION

Your Company's Legal Division is committed to providing responsive client-centricservice that protects and advances Pfizer's goals. The Legal team's activitiesinclude protecting your Company's interest in every transaction ensuring compliance withall applicable laws governing the industry protecting your Company's intellectualproperty and other assets assisting various business units in evaluating the risksassociated with completing transactions and other activities.

Some of the areas where your Company's Legal team partnered are:

Supported the growth of your company's business through strategicacquisitions and divestments transactions

Continuing the active role in mitigating risks relating to litigation ofyour company's key brands

Ensuring your company's activities and transactions are aligned and inadherence with the statutory requirements

GLOBAL COMMERCIAL OPERATIONS

• Global Commercial Operations (GCO) celebrating its 3rd anniversary{now known as Commercial Operations (CO)} was formed to centralize and deliver certaincommercial operational functions achieving greater effectiveness and efficiency. CO teamstrives to make commercial operations easier and more impactful for businesses so thatthey remain focused on our patients customers and achieve their goals. The team iscommitted to provide expert driven commercial operations across various businesses andmeet the ever changing needs of our business and customers.

• Field Force has always been and will continue to be at the heart of everythingthe CO does for the Company. For their progress the team focused on three themesacross all programs and initiatives - ‘Ease of Doing Things' ‘CapabilityDevelopment' and ‘Compliance Enhancement'.

• The team focused on driving ‘Ease of Doing Things' at Pfizer throughautomation and digitization – introduced a new platform SARAL for conductingeducation programs for our customers and an improved integrated Sales Force Automationtool UNIFY to simplify processes and save field force time.

• Our initiative iLEAD (Leadership through Execution Analysis and Development) isan ongoing 18 – 24 months comprehensive development journey for first line managerscapability enhancement. It is identified as one of the key drivers for improving businessperformance and is a cross functional project.

BUSINESS TECHNOLOGY

Your Company's Business Technology (BT) Division is in the forefront of implementingcutting edge innovative Information Technology solutions which helps the business grow.The team's objectives' are closely aligned to your Company's growth strategy and the teamhas been actively partnering with the commercial teams to enhance the technologicaladvancements that help improve customer engagement as well patient outcomes. While doingso the BT team continues to align the technology function with global standards andprocesses. GST for India is a historical and long awaited tax transformation initiativeand all industries have been impacted by this. The BT team along with Finance andDistribution teams managed this mega-tranformation project seamlessly without any impactto the business operations.

Some other technical solutions which were implemented last year are as below.

• Unify – Integrating the reporting and digital detailing module therebyenabling easier daily reporting for field colleagues

• GoActive – India's first mobile Application for HealthCare Professionalengagement

• Innovations in pipeline – Mobile WiFi Clinics Pfizer Touch VirtualReality and Augmented Reality platforms

• Business Analytics for Distribution team and process automation

The BT team is committed to provide best in class solutions to our customersemployees channel partners and vendors and to that effect the team continues to explorevarious world class CRM solutions. Our focus for next year remains on a digital strategythat would cover the whole gamut of social connect mobile apps multi-channel marketingand other Virtual and Augmented reality platforms.

FINANCE

The Finance Division is a key partner to the Management in upholding internal controlsand governance standards driving performance and leading enterprise wide initiatives.

In the current year:

• Finance played a key role in the acquisition of Neksium from AstraZeneca ABSweden for a consideration of Rs. 75 Crores sale of four products to PiramalEnterprises Limited for Rs. 108.76 Crores and the transition of Meronem distribution toyour Company from AstraZeneca Pharma India Limited.

• The Finance team successfully led the transition to Goods and Services Tax(GST) a complex initiative impacting all aspects of the Company's operations. The Financeteam conceptualized the project and managed the re-configuration of all IT systems to beGST compliant in partnership with Business Technology. The team also ensured that themassive exercise of changing prices across channels managing vendors relationships andtax compliances were managed smoothly.

• Finance is also leading the project for transitioning to a new integrated ERPsystem which will cover all aspects of the value chain - demand planning supply networkplanning direct and indirect procurement manufacturing quality sales and distributionoperations and financial accounting. The introduction of this ERP solution is a massiveoverhaul of all our current systems and processes. The deployment will be based onthe parent company's global model which will help your Company to leverage on globalprocesses compliances and costs. The transition to the new ERP model is expected to becompleted in October 2017.

Despite these multiple major initiatives the Finance function has ensured that itscore focus on ensuring fiduciary integrity upholding governance standards and providingtimely pro-active decision support to the business was maintained at highest levels.

INTERNAL CONTROL SYSTEMS THEIR ADEQUACY AND COMPLIANCE

Overview: Compliance Controls and Risk (CCR) Team is responsible for continuouslymonitoring the adequacy and effectiveness of internal controls. The team's objective is toprovide to the Senior Management and Audit Committee an independent and reasonableassurance on the adequacy and effectiveness of the Company's risk management control andgovernance processes. This is achieved through a co-sourced internal audit modelwhich includes independent reviews performed by CCR team together with audit reviewsperformed through an independent Chartered Accountant firm.

Internal Financial Control: The Company has laid down Internal Financial Controls thatincludes a risk based framework to ensure orderly and efficient conduct of its businesssafeguarding of its assets accuracy and completeness of the accounting records andassurance on reliability of financial information. The Audit Committee evaluated thedesign framework and operative assessment and deliberated with members of management andStatutory Auditors to ascertain their views or opinion. The Audit Committee is satisfieditself with the adequacy and effectiveness of the internal financial control system laiddown by management. The Statutory Auditors have confirmed the adequacy of the internalfinancial control systems over financial reporting.

Risk Assessment: The CCR team conducts a risk assessment every year whereby all risksto the objectives of the company are assessed and mitigating plans are put in place. Theserisks include operational regulatory legal business and compliance risks. All the keyrisks along with mitigating plans are presented and discussed annually with AuditCommittee. This year the CCR team conducted joint risk assessment with the CorporateCompliance team of Pfizer Inc. to leverage the expertise and learnings from each other.

Internal Audit Plan: Annually based on the risk assessment and findings from previousinternal audits the CCR Team prepares the annual audit plan which is approved by theAudit Committee and followed throughout the year. As part of the quarterly review statusof the annual audit plan design assessment operating effectiveness key audit findingsand remediation status of prior findings are presented and discussed with Audit Committee.

MAPP: Your Company has a policy covering interaction with Healthcare Professionals andGovernment officials called ‘My Anti-Corruption Policy & Procedures' (MAPP). Thepolicy addresses both local legal requirements while also leveraging on best practicesfollowed in other markets. As a way of reinforcing its compliance culture your Companyhas identified 108 odd colleagues as "Compliance Champions" from various teamswho act as first point of contact for any colleague in case they have policy relatedquestions.

Given all the above your Company is well placed in driving the spirit of complianceacross its colleagues and stakeholders.

CORPORATE AFFAIRS

The Corporate Affairs Division continued to focus on building engagement with keystakeholders through its functions of Government Relations Communications EmployeeEngagement and Corporate Social Responsibility.

Public Affairs & Communications:

As a part of leading industry associations like Organisation of PharmaceuticalsProducers of India (‘OPPI') Federation of Indian Chambers of Commerce & Industry(‘FICCI') Confederation of Indian Industries (‘CII') and Associated Chambers ofCommerce & Industry (‘ASSOCHAM') your Company has driven several stakeholderengagement initiatives in the year under review. Your Company's Managing Director Mr. S.Sridhar has also been elected as the Vice President of the OPPI and the Co-Chair of theFICCI Pharmaceutical Committee for the current year.

(i) Engagement through industry associations and direct advocacy

• As an OPPI member your Company continues to participate and play an active rolein engaging with the relevant government stakeholders on policy matters including pricingand regulatory amendments that would help in creating a more stable and transparentbusiness environment for your Company as well as the industry to operate in

• Through the US-India Business Council (‘USIBC') platform on‘Innovation Driven Expansion of Healthcare Access' your Company was able topresent its position on innovative models that could aid in bridging the current gap inhealthcare access to key government stakeholders and policy experts

• Your Company partnered the flagship Government of India events such as the FICCI‘India Pharma 2017' and CII ‘Partnership Summit' showcasing its key CSRinitiatives and manufacturing footprint respectively

• Your Company through a FICCI engagement was instrumental in programming theconference on - "Unlocking India's potential as the entrepreneurship hub inHealthcare" on current need for encouraging an indigenous healthcare innovationlandscape with key government stakeholders present

• Your Company independently has initiated several dialogues with policy decisionmakers to work on a concentrated effort in increasing access to medicines. One suchimportant dialogue in this area continues to be on advancing tiered pricing conceptsthrough which targeted benefits can be extended to socio-economic segments that wouldbenefit the most from them. This continues to be an area of focus where yourcompany will play a leading role - advocating for solutions that provide for a betteralternative to blanket price controls.

(ii) Communications: Your Company's Corporate Communications team plays the role ofa key enabler in communicating its growth plans strategic position to multiplestakeholders both internally and externally. This team is instrumental in ensuring thatyour Company colleagues are up-to-date on the several initiatives and engagements itpursues externally as well as internally through townhalls messages from the ManagingDirector Crucible – Pfizer's internal newsletter etc. Externally the team focuseson gaining visibility through media and non-media platforms for flagship Pfizerinitiatives.

(iii) Employee Engagement initiatives: Your Company aims at creating and sustaininga culture of engagement and teamwork that drives high performance and builds a positivework environment. The team achieves that through an active calendar of employee engagementactivities that focus on Health and Wellness Family celebrations and the Annual Own ItDay. By winning celebrating and contributing together your Company works towardproviding happy environment where colleagues bond collaborate across functions and teamsand above all – look forward to achieving shared goals by doing great work together.

Some of the key highlights for the year under review are:

Family Fiesta: For the second consecutive year Pfizer Family Fiestabrought together Your Company's colleagues and their families to celebrate the One Pfizerspirit. Across head office and regional offices including Mumbai Delhi Goa Hyderabadand Chennai the celebrations were organized as fun-filled days at amusement theme parks

Rewards & Recognition: Honoring 18 successful projects and more than120 members of project teams your Company conducted the Rewards & Recognition programin combination with Family Fiesta celebrations. Both the One Pfizer Jury Awards and theCountry Manager Awards distinguished teams and individuals for their significantcontributions to achieving business results

Year of the Field Force (YFF): Dedicated to the field colleagues whocontinue their commitment and determination to make your Company stand tall in front ofits stakeholders the institution of YFF has allowed many ideas to be implemented thathelp the field colleagues. From the Sales Career Architecture which charted a growth pathfor their role aspirations to a ‘Stay Hydrated' campaign that aimed at helping thembeat the heat and stay healthy during summer as well as the YFF special edition ofinternal magazine Crucible these initiatives boosted field force morale and effectiveness

Enhancement of Workplace Environment: Your Company's move into a new openand vibrant office premises having completed a year continues to encourageideation and cross-functional collaboration that has tremendously enhanced the workculture and the collective output from teams. Adding new recreational facilitiesincluding an indoor games room gym and garden have provided the colleagues achance to refresh and recharge at work thereby contributing to enhanced results.Similarly the move to new offices at Delhi and Kolkata brings the benefits of an openworkplace environment and innovative space branding to these regional centers. YourCompany's continued investment in its workplaces ensures that its colleagues have a greatenvironment to innovate and collaborate to do their best work

CORPORATE SOCIAL RESPONSIBILITY

Our CSR Purpose

Your Company continued to stay true to its stated purpose of promoting access toquality healthcare in the country by nurturing innovations encouraging communityinvolvement of our employees and synergizing efforts in partnerships with government andother stakeholders for collective impact.

CSR Initiatives

Your Company's initiatives undertaken for the year under review is a demonstration ofour commitment to its CSR purpose. Giving back to the society is embedded in our culture.With the intent of providing access to safe effective and affordable medicines andhealthcare services your Company has undertaken several outreach initiatives that alignsto the global imperative of earning greater respect from society. These programsallows your Company colleagues to volunteer their time that instills a sense of pride andpurpose going much beyond the conduct of everyday business.

This year Your Company continued to identify choose and work on projects that arealigned to your Company's CSR priorities listed below:

i. Encourage and support Indian innovation and Indian Intellectual Property with afocus on Healthcare;

ii. Undertake awareness and access programs ourselves or in partnership with NGO'sGovernment and Healthcare Providers in areas such as Women and Child health among others;

iii. Support Government's national and/or state programs and priorities with linkagesto healthcare;

iv. Enlist employees as volunteers to support activities around health sanitation anddisease awareness;

v. Participate in disaster relief activities.

Some key initiatives undertaken during the year were:

1. Project to encourage healthcare innovations Made in India

The Pfizer IIT Delhi Innovation and IP Program launched in 2015-16 aims at encouraginginnovators to create healthcare innovations Made in India. We partnered with theFoundation for Innovation and Technology Transfer (FITT) at the Indian Institute ofTechnology Delhi to launch an incubation accelerator initiative -- Pfizer IIT DelhiInnovation & IP Program.

Aligning with the Company's ethos of bringing healthcare innovative solutions thatsignificantly improve lives The Pfizer IIT-Delhi Innovation and IP Program is an exampleof an industry-academia collaboration that aligns with the "Startup India Stand upIndia" program launched by the Hon'ble Prime Minister of India.

The Phase 1 of this project selected and awarded two full time innovators with anunencumbered funding of upto Rs. 50 Lakhs per incubatee. These innovators are incubated atIIT Delhi where they are currently developing the prototype of their innovation. Theprogram also awarded grants to three innovators towards IP Filing support services. Thetwo noteworthy projects selected under the resident incubation are the novel wearabledevice for air purification and portable device for early diagnosis of Typhoid andantibiotic susceptibility.

Further to the success of Phase 1 your Company rolled out Phase 2 of the program bycalling in entries at a national level. This phase has selected the next two innovatorsfor resident incubation and three innovators for IP filing support services. The secondphase winners of the program have been identified and will shortly awarded the grants.

2. Project on combating Anti-Microbial resistance

India being the largest consumer of antibiotics the government in 2016 committed totackling AMR by taking further steps towards a new National Action Plan on AMR.Globally Pfizer has been aligning with governments medical societies and healthcareinstitutions to enhance antibiotic surveillance programs and improve awareness.

In India during the last couple of years your Company has been conducting severalantimicrobial stewardship education programs and workshops to promote rational use ofantibiotics and infection control practices in smaller hospitals and nursing homes.

This year your Company will be working with government stakeholders to expand existingsurveillance programs and enhance stewardship programs to combat Anti-Microbialresistance.

3. Sanitation Project

As part of its contribution towards the Swachh Vidyalaya/Swachh Bharat Campaign yourCompany continued its efforts in building and refurbishing sanitation facilities inschools across the country. This year your Company continued its sanitation programs inMaharashtra Goa Delhi Mewat (Haryana) and Lucknow (UP) taking the number of schoolscovered to a total of 31. Your Company would be expanding its sanitation drive to AndhraPradesh and Chennai in 2017-18.

4. During the year under review your Company also provided grants worth Rs. 88.39Lakhs to institutions that work in the area of healthcare development. The total amountspent by the Company towards CSR activities during the year is Rs. 788.19 Lakhs. YourCompany is proud to exceed its mandated CSR spending for the year.

A brief outline of the Corporate Social Responsibility (CSR) Policy of the Company andthe initiatives undertaken by the Company on CSR activities during the year are set out in"Annexure - A" of this Report in the format prescribed in the Companies(Corporate Social Responsibility Policy) Rules 2014. The policy is available on thewebsite of the Company - ‘www.pfizerindia.com'.

WHISTLE BLOWER / VIGIL MECHANISM

Your Company has established a Whistle Blower / Vigil Mechanism through which itsDirectors Employees and Stakeholders can report their genuine concerns about unethicalbehaviour actual or suspected fraud or violation of the Company's code of conduct orethics policy. The said Policy provides for adequate safeguards againstvictimization and also direct access to the higher levels of supervisors. TheE-mail ID for reporting genuine concerns is: ‘corporate.compliance@pfizer.com'. Inappropriate and exceptional cases concerns may be raised directly to the Chairman of theAudit Committee at ‘Chairman.IndiaAuditcom@pfizer.com'. A quarterly report on thewhistle blower complaints received and action taken thereon is placed before the AuditCommittee for its review.

DIRECTORS

In accordance with the provisions of the Companies Act 2013 Mr. Vivek Dhariwal (DIN:02826679) retires by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.

Ms. Lu Hong (DIN: 07358719) resigned as Non-Executive Woman Director from the Board ofthe Company with effect from November 4 2016. Your Directors wish to place onrecord their appreciation for the valuable contributions made by Ms. Lu Hong.

The Board of Directors of the Company at their meeting held on November 4 2016pursuant to the recommendation of Nomination and Remuneration Committee appointed Dr.Anurita Majumdar (DIN: 05291758) as an Executive Director Medical of the Company witheffect from November 4 2016 for a period of 5 (five) years subject to the approval ofmembers at the ensuing Annual General Meeting. The Company has received a Notice forcandidature as a Director from a Member pursuant to Section 160 of the Act.

The Board of Directors of the Company at their meeting held on January 30 2017pursuant to the recommendation of Nomination and Remuneration Committee appointed Mr.Ravi Prakash Bhagavathula (DIN: 07282100) as an Executive Director Finance of the Companywith effect from January 30 2017 for a period of 5 (five) years subject to the approvalof members at the ensuing Annual General Meeting. The Company has received a Notice forcandidature as a Director from a Member pursuant to Section 160 of the Act.

The Board of Directors of the Company at their meeting held on May 6 2017 pursuant tothe recommendation of Nomination and Remuneration Committee re-appointed Mr. VivekDharival (DIN: 02826679) as an Executive Director Technical Operations of the Companywith effect from May 21 2017 for a period of 5 (five) years subject to the approval ofmembers at the ensuing Annual General Meeting.

All Independent Directors have given the declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

Board Performance Evaluation

The Company has devised a Performance Evaluation Framework and Policy which sets amechanism for the evaluation of the Board Board Committees and Directors.

Performance Evaluation of the Board Committees and Directors was carried out throughan evaluation mechanism in terms of the aforesaid Performance Evaluation Framework andPolicy.

The performance evaluation of each individual directors the Board and Committees wascarried out through deliberations. The said performance evaluation was done based on theparameters stated in the templates designed under the aforesaid Framework and after takinginto consideration the guidance note issued by the Securities and Exchange Board of Indiaon January 5 2017.

Independent Directors' Meeting

One Meeting of the Independent Directors was held on May 6 2016 without the presenceof the Executive Directors and Management Personnel. At the Independent Directors Meetingheld on May 6 2016 the Independent Directors carried out performance evaluation of Non-IndependentDirectors and the Board of Directors as a whole performance of Chairman of the Companythe quality content and timeliness of flow of information between the Management and theBoard based on the Performance Evaluation framework of the Company. All the IndependentDirectors were present at the aforesaid Meeting.

FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

Your Company has in place a Familiarization Program for Independent Directors toprovide insights into the Company's business to enable them contribute significantly toits success. The Executive Directors and Senior Management make presentations periodicallyto familiarize the Independent Directors with the strategy operations and functions of theCompany. Your Company also circulates news and articles related to the Industry andprovide specific regulatory updates to the Independent Directors on a regular basis.

A brief summary of the major Familiarization Programs carried out during the year forthe Independent Directors is given below:

Sr. No. Particulars of the Programs / Presentations Date No. of Hours Duration(Hrs)
1. Presentation on business update and regulatory developments October 17 2016 1.5
2. Meeting with Ms. Janine Small Regional President for discussion on the Pfizer's outlook for India. October 27 2016 1.5
3. Presentation on the Medical Affairs Division November 4 2016 0.5
4. Presentation on the Goods and Service Tax and ERP implementation November 4 2016 1
5. Presentation on Business Strategy January 30 2017 1.5
Total Duration (Hours) 6

Nomination and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy for selection and appointment of Directors Senior Management Key ManagerialPersonnel and their remuneration. The Nomination and Remuneration Policy is annexedherewith as "Annexure - B".

Meetings of the Board

The details of the meetings of the Board and Committees are provided in the CorporateGovernance Report (Annexure H to the Board's report).

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors make the following statements in terms of Section 134(3)(c) of theCompanies Act 2013:

a. that in the preparation of the annual financial statements for the year ended March31 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

b. that such accounting policies as mentioned in Note 2 and 3 of the Notes to theFinancial Statements have been selected and applied consistently and judgments andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the profit of theCompany for the year ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

AUDIT COMMITTEE

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

RISK MANAGEMENT POLICY

The details pertaining to the Risk Management Policy are included in the CorporateGovernance Report which forms part of this Report.

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. The Company had entered into materially significantrelated party transactions with Pfizer Export Company Ireland Pfizer Innovative SupplyPoint Intl BVBA Belgium and Pfizer Service Company BVBA Belgium for purchase of rawmaterials bulk drugs and finished goods. The same are within the limits duly approved bythe members at the 63rd Annual General Meeting for Pfizer Export CompanyIreland and 65th Annual General Meeting for Pfizer Innovative Supply Point IntlBVBA Belgium and Pfizer Service Company BVBA Belgium.

All Related Party Transactions are placed on a quarterly basis before the AuditCommittee for approval and before the Board for consideration and noting.

The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website ‘www.pfizerindia.com'. The weblink for the Policy ishttp://www.pfizerindia.com/eNewsWebsite/investor/pdf/Revised%20Related%20Party%20Transaction%20Policy%20-%20Pfizer%20website.pdf

None of the Directors have any material pecuniary relationships or transactionsvis--vis the Company.

Pursuant to Section 134 of the Companies Act 2013 and Rules made thereunderparticulars of transactions with related parties as required under Section 188 (1) of theCompanies Act 2013 in the prescribed Form AOC-2 is annexed herewith as "Annexure- C".

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

The Company has not granted any loans guarantees and investments for the financialyear ended March 31 2017.

DEPOSITS FROM PUBLIC

During the financial year under review the Company has not accepted any deposits frompublic and as such no amount on account of principal or interest on deposits from publicwas outstanding as on the date of the Balance Sheet.

DISCLOSURES OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

No orders have been passed by any Regulator or Court or Tribunal which can have impacton the going concern status and the Company's operations in future.

OTHER INFORMATION

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as "Annexure -D".

A table containing particulars of employees in accordance with the provisions ofSection 197(12) of the Companies Act 2013 ("the Act") read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed herewith as "Annexure - E".

The information required pursuant to Section 197(12) of the Act read with Rule 5(2) ofThe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of the Company forms part of this Report. However as per theprovision of Sections 134 and 136 of the Act the Report and Accounts are being sent tothe Members and others entitled thereto excluding the information on employees'particulars which is available for inspection by the Members at the Registered Office ofthe Company during business hours on working days of the Company up to the date of theensuing Annual General Meeting. Any member interested in obtaining a copy of suchstatement may write to the Company Secretary at the Company's Registered Office.

The Company does not have any subsidiary company or associate company or joint venturecompany.

AUDITORS

The Auditors Messrs. B S R & Co. LLP were appointed as Statutory Auditors to holdoffice for a term of 3 (three) years from conclusion of 63rd AnnualGeneral Meeting till the conclusion of the 66th Annual General Meeting subjectto ratification by members at every subsequent Annual General Meeting. Accordinglythe Statutory Auditors Messrs. B S R & Co. LLP would be completing their maximum termpermitted under Section 139 of the Companies Act 2013 and the Rules made thereunder atthe ensuing Annual General Meeting.

The Auditor's Report for the financial year ended March 31 2017 do not contain anyqualification reservation or adverse remark.

The Board of Directors of the Company at their meeting held on May 6 2017 haverecommended the appointment of Messrs. Walker Chandiok & Co LLP CharteredAccountants (Firm Registration No. 001076N/N500013) as the statutory auditors of theCompany. Messrs. Walker Chandiok & Co LLP have confirmed their eligibility forappointment under Section 139 read with Section 141 of the Companies Act 2013.

Messrs. Chandiok & Co LLP will hold office for a period of 5 (five)consecutive years from the conclusion of the ensuing 66th Annual GeneralMeeting of the Company till the conclusion of the 71st Annual General Meetingsubject to ratification by shareholders at every subsequent Annual General Meeting.

COST AUDITORS

Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Rules 2014 as amended from time to time the cost audit recordsmaintained by the Company is required to be audited. Your Directors had on therecommendation of the Audit Committee appointed Messrs. RA & Co. to audit thecost accounts of the Company for the financial year 2017-18 on a remuneration of Rs. 11.50Lakhs. As required under the Companies Act 2013 the remuneration payable to the CostAuditor is required to be placed before the Members in a general meeting for theirratification. Accordingly a Resolution seeking Member's ratification for the remunerationpayable to Messrs. RA & Co. Cost Auditors is included at Item No. 10 of the Noticeconvening the Annual General Meeting.

The Company has filed the Cost Audit Report for Formulations and Compliance Report forthe financial year ended March 31 2016 on September 27 2016 which is within thestipulated timeline prescribed under the applicable regulations. The Cost Audit Report forFormulations for the financial year ended March 31 2017 is due to be filed by September27 2017.

Messrs. R. A. & Co. have confirmed their eligibility to be the Cost Auditors andhave been appointed to conduct Cost Audit of the Company's records for the financial yearending March 31 2018. The remuneration is subject to ratification by the shareholders.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Messrs. Saraf & Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith as "Annexure - F". The Secretarial Auditor Report for thefinancial year ended March 31 2017 does not contain any qualification reservation oradverse remark.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as "Annexure - G".

CORPORATE GOVERNANCE & BUSINESS RESPONSIBILITY REPORTING

A Report on Corporate Governance along with a Certificate from Messrs. B S R & Co.LLP regarding compliance with the conditions of Corporate Governance as stipulated underRegulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 forms part of this Report and annexed herewith as "Annexure - H".

A Business Responsibility Report as stipulated under Regulation 34(2) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 describing the initiativestaken by your Company from an environmental social and governance perspective forms partof this Report and annexed herewith as "Annexure-I".

CAUTIONARY NOTE

Certain statements in respect to Management Discussion and Analysis may be forwardlooking and are stated as required by the applicable laws and regulations. The futureresults of the Company may be affected by many factors which could be different from whatthe Directors envisage in terms of future performance and outlook.

ACKNOWLEDGMENTS

Your Directors would like to place on record their sincere appreciation for the supportand assistance extended by the Company's suppliers and business associates. Your Directorsare thankful to the esteemed shareholders for their continued support and the confidencereposed in the Company and its Management.

Your Directors wish to place on record their appreciation for the support and guidanceprovided by its Parent Company Pfizer Inc. USA.

For and on behalf of the Board of Directors
R. A. Shah
Mumbai July 29 2017 Chairman