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Pfizer Ltd.

BSE: 500680 Sector: Health care
NSE: PFIZER ISIN Code: INE182A01018
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VOLUME 603
52-Week high 2055.00
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P/E 41.11
Mkt Cap.(Rs cr) 8,190
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Pfizer Ltd. (PFIZER) - Director Report

Company director report

Including Management Discussion and Analysis

TO THE MEMBERS

Your Directors take pleasure in presenting this 65th Annual Report alongwith the Audited Financial Statements for the financial year ended March 31 2016. TheCompany operates only in one business segment viz. "Pharmaceuticals" and thisReport covers its Pharmaceutical business performance.

DIVIDEND

Your Directors recommended a dividend of Rs.15.00 (150%) per equity share for theperiod under review. The dividend payout will be Rs.6862 Lakhs and the dividenddistribution tax payable by the Company would amount to Rs.1397 Lakhs. This aggregates toRs.8259 Lakhs.

FINANCIAL HIGHLIGHTS

Rs. in lakhs
Particulars Year ended March 31 2016 Year ended March 31 2015
Revenue from Operations (net) 199486 182774
Operating and other Income 10790 9292
Profit Before Tax and Exceptional Items 39232 31846
Exceptional Items (Expenses)/Income 989 (8045)
Profit Before Tax 40221 23801
Less: Taxation
Current Tax 18781 15100
Deferred Tax (Credit)/Debit (837) (1332)
Profit before impact of Scheme of Amalgamation 22277 10034
Impact of Scheme of Amalgamation - (3052)
Profit for the year after impact of Scheme of Amalgamation 22277 6982
Balance of Profit from Prior Years 30468 30387
Surplus available for Appropriation 52745 37369
Appropriations:
Adjustment on account of Depreciation - 19
Proposed Dividend 6862 5718
Tax on Dividend 1397 1164
Surplus as per Balance Sheet 44485 30467

Your Company's net sales for the year ended March 31 2016 was Rs.199486 Lakhs ascompared to Rs.182774 Lakhs in the previous year registering a growth of 9%.

Profit before tax and exceptional items for the financial year ended March 31 2016increased by 23% to Rs.39232 Lakhs from Rs.31846 Lakhs.

Your Company achieved a Net Profit of Rs.22277 Lakhs for the Financial year endedMarch 31 2016 as compared to Rs.6982 Lakhs in the previous year after giving effect tothe scheme of amalgamation of Wyeth Limited with Pfizer Limited.

Indian Economic Overview

Amid global uncertainty the Indian economy continued to restore its macroeconomicstability. India's GDP grew by 7.6% in 2015-16 making it one of the fastest growing majoreconomies in the world. Inflation remained under control and fiscal and current accountdeficits continued to remain moderate. The Government of India's strong commitment tofiscal targets focus on infrastructure creation and attracting investments bolstered theconfidence of entrepreneurs and investors.

Government initiatives like Make in India Smart Cities campaign Pradhan Mantri JanDhan Yojana augur well for the country's overall development. Besides the Swachh BharatAbhiyan has brought hygiene sanitation and their linkage to health onto the forefront.The Department of Industrial Policy and Promotion (DIPP) announced the Startup India Standup India initiative to celebrate India's entrepreneurial spirit and to encourage anecosystem for fostering innovation and entrepreneurship in the country.

While these programmes act on distinct levers of socio-economic growth theGovernment's underlying focus has been on enhancing the ease and attractiveness of doingbusiness in India. In the World Bank's rankings on ease of doing business India moved up12 ranks to 130.

Going forward India's economic growth is projected to remain robust at around 7.25%as reported by Organization of Economic Co-operation and Development in November2015. Three key trends are expected to play a major role in the growth of both GDP anddemand:

1. A favourable demographic – with an approximate addition of 200 million to theworking age group by 2030

2. Rapid expansion in the number of high-income households – from 9 million in2010 to 32 million by 2020. Fast emergence of middle-income families – from 63million to 117 million by 2020

3. Increased pace of urbanisation: 40% of India's population will be urban by 2030compared to 31% in 2010 resulting in the urban economy constituting as much as 75% of thenational GDP. (Source: Euromonitor Bain BCG PwC).

Indian Pharma Industry

Indian pharmaceutical market is the third-largest in terms of volume and 13thlargest in terms of value (Source: UBM India) in the world.

According to IMS MAT (March 2016) the Indian Pharmaceutical Market (IPM) touchedRs.104633 crores registering 14.4% growth in 2015-16. The volume of existingproducts new products and price increase made 5.0% 3.6% and 3.6% contributions to thisgrowth respectively. The growth of the IPM improved to 14.4% in 2015-16 from 13.4% in2014-15.

Generic drugs form the largest segment of the Indian pharmaceutical sector. The brandedgeneric segment itself comprises over 40000 brands. The McKinsey India Pharma 2020 reportsuggests that while the mix of therapies will continue to gradually move in favour ofspeciality and super-speciality therapies mass therapies will still command half of thetotal market share in 2020.

Domestic growth drivers

The growth in the healthcare market has been buoyant on account of several advantages:

1. Strong demand - Rising incomes greater health awareness demand fortreatment of lifestyle diseases and increasing access to insurance

2. Attractive opportunities - Investment in healthcare infrastructure is setto rise. From the creation and upgradation of primary secondary and tertiary healthcarefacilities to investments in research and development capabilities. Medical tourismremains a strong demand creator for the sector.

3. Quality & expanding access - Expansion of healthcare institutionalservices deeper penetration of the market by pharmaceutical companies and growing demandfor quality therapies.

4. Policy support -Through ongoing programs such as the National RuralHealth Mission (NRHM) expansion of the Universal Immunisation Program Government andstate funded health insurance schemes like "Arogyasri" and the expansion of theJan Aushadhi scheme to increase access to affordable generic drugs.

While the long term outlook continues to be positive driven by these mega trends inthe short run recent policy decisions are adversely impacting the industry. Over the lastfew years price control has dented the revenues of the industry. Further the manner inwhich the latest NLEM price changes have been implemented as well as the process followedfor the notification banning certain Fixed Dose Combinations have not been in theGovernment's spirit of "ease of doing business". Your Company recommends thatthe Government ensure a greater balance between the needs of patients with that of thepharmaceutical industry in future policy initiatives and implementations.

Industry challenges

Policy Implementation challenges: The Government framed the Draft National HealthPolicy 2015 to provide universal access to public health facilities. However itsimplementation has been challenging. Several provisions including the proposal to providefree essential drugs have been deprioritised.

Fund allocations: Budgetary allocation to healthcare has remained stagnant. At 1.3%of GDP India's allocation continues to remain among the lowest globally. The 12thfive year plan as well as the draft National Health Policy committed to increase this to2.5% of GDP. By comparison the other BRICS countries allocate between 3.5 to 8.5%of their GDP towards healthcare priorities.

Drug price control: Expanding scope of price controls will remain the single mostsignificant challenge for the industry. Through policy measures such as the Drug PriceControl Order the Government continues to actively regulate prices of an expanding numberof pharmaceutical products. This was evident during the year with the expansion of theNational List of Essential Medicines. The recent amendment to the DPCO 2013 has seen thenumber of drug formulations under price control increasing.

The expansion of the National List of Essential Medicines (NLEM) has added 106 drugsand deleted 70 drugs as on December 2015. This brings the total number of listed drugs to376. In line with provisions under DPCO 2013 the prices of 530 formulations are subjectto price control. The ceiling price of these formulations has been further reviseddownwards by 2.71% in April 2016 following a reduction in the annual wholesale priceindex.

While the Government's objective is to improve access through price control yourCompany believes and recommends that a tiered pricing model that allows for differentialpricing between public and private markets is a more effective tool to achieve the saidobjective.

Ban on fixed dosage combination (FDC) drugs: In March 2016 the DCGI announced aban on approximately 350 FDCs after review of 6000 FDCs. While the intent of theGovernment in taking action against unsafe or irrational pharmaceutical products that havenot received due approvals by the central drug regulator is well appreciated concernshave been raised on including products that have received all requisite approvals as alsoon the process followed to arrive at the list.

Industry outlook

The government's priorities include providing healthcare infrastructure expandinguniversal insurance and enhancing access to medicines. Through the National IPR Policythe Government has also indicated its priority to improve the innovation eco-system inIndia. The policy proposes initiatives ranging from increasing awareness around IP tostrengthening the legislative frameworks and encouraging industry-academiacollaborations. These measures and priorities provide an opportunity for continued growthfor the industry.

Going forward the expanding medical infrastructure increasing awareness and detectionof chronic diseases and a fast expanding health insurance cover will drive the pharmasector's growth. McKinsey suggests a health insurance penetration of 45% by 2020. Thegovernment sponsored schemes particularly the Rashtriya Swasthya Bima Yojana is expectedto contribute 22% of the overall health insurance coverage.

Although the growth may slowdown slightly in the remaining part of 2016 it is expectedto remain steady throughout the forecast period. India's consistent economic growth andrapid increase in chronic diseases will contribute to steady market growth. The marketwill continue to be regulated to ensure promulgation of most effective medicines.

REVIEW OF OPERATIONS:

Your Company maintained its position as the 3rd largest MNC and 10thlargest company in the Indian pharma market. In nine of its 15 therapy areas PfizerLimited is positioned among the top 10 in the market. Eight products of your Companyfeature in the list of top 100 pharmaceutical brands in India. Three of your Company's keybrands Prevenar-13 (pneumococcal vaccine) Becosules (Multivitamin) and Corex (CoughFormulation) ranked among the top 20 pharmaceutical brands in India.1 YourCompany is focused on growing and strengthening the power brands with an active promotionof new and innovative products in its therapy areas and expansion of these power brandswith line extensions. Your Company has nine teams promoting various products of theCompany.

Vaccines:

Prevenar 13 is a pneumococcal conjugate vaccine approved for the prevention ofpneumococcal pneumonia and invasive pneumococcal disease caused by 13 streptococcuspneumonia strains. Prevenar13 has consistently been one of Pfizer's strongest performingbrands with a growth momentum in mid double digits year on year with a market share of 18%in the Indian Vaccine market2.

Aligning with the Government of India's priority of reducing child mortality due tovaccine preventable diseases your Company is working closely with the Government toarrive at solutions that will have a major impact on the health of millions of children inIndia and will help lower the global burden of pneumococcal disease. The introduction of anew presentation of multi-dose vial globally reflects the Company's commitment to creatingan affordable and sustainable program in the world's more vulnerable communities includingIndia.

Your Company has implemented a number of initiatives to educate and create awarenessamongst healthcare professionals to emphasize the need of Pneumococcal vaccine in savinglives of children and adults. Some of these include Continued Medical EducationalPrograms Speaker Development Programs Nurses & Paramedic Educational Programs onbest practices in immunization.

Trade Rx:

The Trade Rx team manages the flagship brands like Gelusil Becosules andCorex through pioneering customer centric marketing programs aimed at making the brandrelevant to the current stakeholders.

The portfolio with the blockbuster brand Corex enjoys 50% market share3in its category; new line extensions have been introduced to further strengthen theportfolio - Tricorex and Corex Nasal Spray caters to conditions arising out of wet coughand to soothe nasal congestion respectively.

The Government of India recently passed a prohibitory order for the manufacture forsale sale and distribution of fixed dose combination of Chlopheniramine Maleate + CodeineSyrup. Your Company had challenged the said notification before the Hon'ble Delhi HighCourt for its product "Corex" and obtained an interim stay on the operation andexecution of the notification. The legal proceedings are ongoing. The stay order from theHon'ble Delhi High Court has enabled the Company to continue manufacture and sale ofCorex.

Becosules is the No.1 B-Complex in India with a market share of 55%4 inits category and this year the Portfolio also introduced new line extensions - BecosulesPerformance and Becosules Plus.

With 28% market share5 Gelusil is the No.1 liquid antacid used forrelief in acidity heartburn and flatulence and is a leader in its category. The teamintroduced uniquely positioned new line extensions of Gelusil Xtracool for acidity withnausea and Gelusil sachet for the on-the-go consumer.

Some of the key programs undertaken for the year under review were Doctors' engagementprograms Trade / Retail outreach Consumers outreach and activities to enhance categorypresence.

Women's Health Care (WHC):

The Women's Health continues to be one of the most significant therapy areas for yourCompany. Pfizer Limited's brands are amongst the Top 3 in the catagories ofcontraceptives folic acid iron supplements and Menopausal Hormone Therapy. The WHCportfolio continues to retain leadership in the represented gynecology market with amarket share of about 12%6. WHC team focused on increasing volumes throughprescriptions for its portfolio by enhancing the scientific engagement with physiciansthrough sustained medical education programs which continue to yield positive results.

Your Company is the leader in the defined Contraception Market with 29.9% market share.In order to enhance awareness and increase the adoption of oral contraceptives themarketing team of WHC conceptualized a ‘Myth Busting Campaign'. The campaign reachedout to doctors and patients alike to demystify the myths associated with long term oralcontraceptive usage. Further the campaign also included expanded usage of oralcontraceptives by strengthening the "Act on Facts" initiative.

Becosules Women a line extension of Becosules is a nutritional supplement forwomen and has performed well since it was launched in the third quarter 2015-16.

Mucaine Gel which is the category leader in Liquid Antacid registered a goodgrowth on the back of an active promotional campaign and introduction of a new bigger 350ml pack.

Anti-Infective Ophtha & Cardiovascular:

Your Company ranks 5th in the hospital segment7 with a wideportfolio covering categories across the critical care segment. This position has beenbuilt over the years through initiatives such as scientific engagements and strong medicaladvocacy.

Your Company has further strengthened this position with the strategy of establishing"Leadership in Hospitals" through segmentation of the market & key accountsto ensure optimal focus. The team designed interventions to drive key brands &segments with strong scientific engagement and to address needs of each segmenteffectively to achieve competitive advantage.

The Ophthalmology business grew by 21.3% over the previous year8. Theportfolio introduced a unique device called Xalease in the second half of the year underreview. This device provides a convenient way for self-administration of eye drops.

The Cardiovascular team operates in the anti-hypertensive segment with its flagshipbrand ‘Minipress XL' which is the second largest anti-hypertensivebrand in India. Amlodipine Pfizer's research molecule and one of world's largest usedantihypertensive is marketed by the team in India as Amlogard.

Pfizer's blockbuster and one of the most popular brands in the world ‘Viagra'continues to provide millions of patients in India with a proven solution to erectiledysfunction. The team is well placed to build a strong portfolio and deliver robust growthin 2016.

Pain Respiratory & Central Nervous System (CNS):

Pfizer's pain portfolio is ranked 5th in Non-Steroidal Anti InflammatoryDrugs (NSAID) market9. This portfolio offers brands as Dolonex & Dalacin Ccapsules; both leading brands in the molecule segment. Dolonex oral is one of the top-3brands in oral NSAID market.

Pain Management team has focused on brand & specialty wise imperatives to leveragegrowth opportunities in targeted segments.

1. Foot note ISP meeting via live webcast that saw a participation from over 680surgeons.

2. Know pain cascade meeting at Primary Care Physicians (‘PCPs') that sawengagement with more than 2000 PCPs through 50 meetings.

Dolonex as a brand has more than 78.5% value market share in its molecule segment10.Mobility clinic launch and know your root program at Dentists were some of the keyinitiatives that the brand undertook during the year.

Dalacin C Capsule is the leading brand in its molecule segment with more than 65%market share11.

Your Company's respiratory portfolio is ranked 3rd in the represented market12.This year the team drove several Key Opinion Leader (KOL) advocacy programs for itsbrands. Partnerships have been created with leading bodies nationally and internationallyto cascade disease continuums to over 3000 physicians. The respiratory team initiatedengaging knowledge programs in areas like inflammation and infection for ENT conditions.The team also collaborated with top Indian and international speakers around appropriatemanagement of asthma exacerbations.

Your Company's Neuroscience portfolio is ranked 6th in the CNS market with ayear on year growth of over 9%13. Major innovative brands like AtivanPacitane and Daxid are leaders in the respective Therapeutic Category IV(molecule segment).

Some of the key initiatives for the year under review have been Innovative scientificand Key Opinion Leader (KOL) advocacy programs coupled with multi-channel marketingactivities that drove the portfolio across Psychiatrists.

The CNS team has further created an innovative program to engage opinion leadersthrough virtual advisory boards. This platform was successful and engaged more than 470Psychiatrists across India.

Consumer Healthcare

For the year under review initiatives were undertaken to enhance distribution coverageinto smaller towns in select states. The team developed innovative display programmes thatwere launched to drive in-store visibility for Anacin and Anne French. A newTV campaign was launched for Anne French to enhance its brand equity and extend usageamong non-users of hair removing creams.

MANUFACTURING OPERATIONS:

Your Company values the confidence and faith reposed by the patients in support ofPfizer Quality products. Your Company has various levels of quality systems starting fromlocal quality assurance to global quality audits and approvals that ensure that the samehigh standards of quality are followed across Pfizer worldwide.

Your Company's continued focus on non-renewable resources has created an excellentmodel for environmental sustainability. There is a constant emphasis on conservation ofresources across manufacturing sites and to reduce waste. Your Company has a state of artand award winning manufacturing facility at Goa. The plant manufactures products with themost stringent global quality. The site holds ISO 9001 and GMP accreditation along withISO 14001 & OHSAS 18001. The site has a Formulation Development Cell catering to newproduct development and technology transfer needs of India Business operations. The Plantstrictly adheres to Global safety and environmental norms and has received a number ofcorporate awards. The Plant was the recipient of Frost and Sullivan "FUTURE READY(PLATINUM) AWARD" in 2015.

In September 2015 your Company entered into a Business Transfer Agreement("BTA") for transfer of the Company's Business at Thane Plant as a goingconcern.

MEDICAL AFFAIRS DIVISION:

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

1. Young Specialists: To partner with specialists with less than five years of clinicalpractice the Medical team launched a "young doctor's program" which is amultipronged education initiative involving webinars on case discussions face to facepreceptorship meetings and also developing treatment algorithms in trauma management andinfectious disease. This initiative will benefit over 5000 doctors across multipledisciplines.

2. Pharmacist Education Program: In India we have seen a huge knowledge gap amongstretail Pharmacists which leads to potential medication errors. Towards bridging this gapyour Company contributed by launching Pharmacy Education Program that will providecertified training to about 1000 Pharmacists on educational modules prepared by anindependent agency.

3. Digital CMEs: To scale up our physician reach in a cost effective way your Companydeveloped unique format of digital CMEs called "meet the expert" in partnershipwith commercial and business strategy team using an in-house HCP portal called Inquimed.Till date more than 6000 physicians have benefitted through these programs.

4. Physician association partnership: We created strong scientific partnership withphysician associations such as FOGSI (Federation of Gynaecologists and obstetricians inIndia) and IMS (International menopausal society) by providing them educational grants toconduct CMEs around the myths of contraception and hormonal therapy. Pfizer wasacknowledged by FOGSI as a knowledge partner in this initiative in their annualnewsletter.

HUMAN RESOURCES ("HR")

Your Company has consolidated and strengthened the interventions set into motion lastyear under People priorities. Our focus continues to remain on integrated talentmanagement leadership development and driving the OWN IT culture. In the year gone byyour Company enhanced focus on leadership development through:

• Talent review exercise conducted to identify top talent within the country alongwith creation of Individual Development Plans and career planning for leaders.

• Partnering with top business schools to create skill development programs formiddle managers

• Career planning for chosen senior leaders

• Succession planning for critical positions

A dedication to field colleagues the Year of the Field Force campaign aims to provideour flag bearers result oriented approach across the following three areas:

• Enhancing the ease of getting things done implemented actions include automatedPfizer Financial tool for quick turnaround in payments digital dashboards for actionableinsights

• Create opportunities to connect and interact with leadership team Actionsimplemented include HR Kiosks for Pfizer policy clarity and addressing queries

• Focus on skill development implemented actions include Competency basedevaluation process incentive schemes. Upcoming - Sales career architecture forcross-functional team movement

STRATEGY & BUSINESS OPERATIONS (SBO)

Strategy & Business Operations (SBO) focuses on the identification of opportunitiesfor growth effectiveness efficiencies and the implementation of initiatives to targetthese opportunities.

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

• Supported the launch of new products across the Nutraceuticals Women's HealthGI & Respiratory therapy areas

• Developed an innovative managed-services based operating model formulti-channel marketing

• Development and roll-out of digital commercial dashboards across the field force

• Worked towards multiple business development deals to address both portfolio androute-to-market opportunities

• Played a key role in supporting projects to enhance the effectiveness of ourfield force (e.g. territory segmentation real-time detailing reports)

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:

• Contribution to position papers on draft Intellectual Property Rights Policy

• Supported your Company's Manufacturing Division for the Thane Plant businesstransfer transaction

• Played active role in mitigating risks relating to litigation of our selectbrands

Your Company's Legal Director Mr. Samir Kazi was awarded the ‘Pfizer GlobalGeneral Counsel Award 2015' by Pfizer Inc. USA

BUSINESS TECHNOLOGY

Your Company's Business Technology Division connects the entire organization and drivesbusiness results using innovative technology platforms. This team works closely with allBusiness Units to strategize develop and deliver business solutions that help them keeptheir customers and stakeholders in the forefront. Some of the key business technologyinitiatives for the year under review are:

• Enhance knowledge dissemination and augmenting reach to healthcare practitionersthrough multi-channel marketing and digital capabilities

• Enhancement of e-detailing capabilities for field colleagues leading to betterin-clinic effectiveness with Healthcare practitioners

• Launch of e-crucible your Company's internal quarterly magazine on i-padsproviding a rich interactive multi-media experience for the field colleagues

• Introduction of commercial business intelligence dashboard leading to actionabledata and insights at the click of a button for effective decision making

• Introduction of leading edge technologies at the new corporate office with softphone facility for all colleagues follow-me printing meeting room bookings via i-pads.These newer technologies have led to greater efficiency and increased colleagueproductivity with significant cost savings.

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 reliable financial information. The Audit Committee evaluated the designframework and operative assessment and discussed with members of management and StatutoryAuditors to ascertain their views or opinion. The Audit Committee satisfied itself withthe adequacy and effectiveness of the internal financial control system laid down bymanagement. The Statutory Auditors have confirmed the adequacy of the internal financialcontrol systems over financial reporting.

Internal Audit Plan: Annually based on the risk assessment and findings from previousinternal audits the CCR Team makes the annual audit plan which is approved by the AuditCommittee and followed throughout the year. As part of the quarterly review status of theannual audit plan design assessment operating effectiveness key audit findings andremediation 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 100 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.

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 unethicalbehaviours 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. The e-mail IDfor reporting genuine concerns is: ‘corporate.compliance@pfizer.com'. In appropriateand exceptional cases concerns may be raised directly to the Chairman of the AuditCommittee at ‘Chairman.IndiaAuditcom@pfizer.com'. A quarterly report on the whistleblower complaints received and action taken thereon is placed before the Audit Committeefor its review.

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.

CORPORATE AFFAIRS

This year the Corporate Affairs Division through its functions of Government RelationsInternal and External Communications and Corporate Social Responsibility undertook numberof policy advocacy stakeholder engagement reputation building community outreach andcolleague engagement programs. Some of the key highlights were –

Policy advocacy:

This has been a year of active advocacy and engagement with Government departmentsministries and policy stakeholders. Areas of dialogue included policy measures that impactthe pharmaceutical industry in general and in certain instances your Company inparticular.

Key highlights of the year under review include:

1. Pricing: Your Company actively led the deliberations around the revision of theNational List of Essential Medicines and its resulting impact on pricing of listed drugs.Pfizer participated in successive consultations held by the NLEM committee across thecountry contributed through position papers that represented the views of the industryand submitted arguments specific to the Company's portfolio.

2. IPR: As a part of its association the OPPI Pfizer was one of the key contributorstowards the industry position and recommendations on the draft National IPR Policy.

3. NIP: Your Company worked extensively with the Ministry of Health and Family Welfareto advocate for the inclusion of a Pneumococcal Conjugate Vaccine in the NationalUniversal Immunization Program.

Strategic Initiatives aligned with the Government's flagship programs:

1. Make in India: Your Company sponsored and participated in flagship Government ofIndia events including the ‘India Pharma 2016' and ‘Make in India Week' andshowcased its manufacturing footprint in the country.

2. Startup India Stand up India: Your Company was invited by the Department ofIndustrial Policy and Promotion (DIPP) Ministry of Commerce to showcase the Pfizer IITDelhi Innovation and IP Program to Prime Minister Narendra Modi Commerce Minister NirmalaSitharaman and Finance Minister Arun Jaitley among other senior representatives of theGovernment.

3. Building a strong reputation: Your Company was proud to receive the ‘MostTrusted Brand in the Medical Category' by IBA Infomedia through a consumer validatedsurvey.

Enhancing the One Pfizer culture:

i. New Office Shift: November 2015 saw Pfizer India shifting its Headquarters to BandraKurla Complex - the commercial district of Mumbai. The Corporate Affairs team utilizedthis opportunity to create a high impact internal "Vibrant New Pfizer" campaign– calling out the new way of work with open offices and a tech-enabled workplace.

ii. Rewards & Recognition: Your Company reinstated the Rewards & Recognitionprogram to recognize the efforts of colleagues and teams who have made an impact to thebusiness.

iii. Family Day: For the first time ever Pfizer India celebrated Family Day across allits locations – HO Goa Plant and all RCs in March and April 2016. This day broughttogether colleagues and their families together for a wonderful shared experience. Itcelebrated the spirit of One Pfizer. Around 30 key projects and more than 120 colleagueswere honored for their contribution to make Pfizer one of the foremost pharmaceuticalcompanies in the country.

iv. Crucible: Your Company's quarterly internal magazine was launched in a digitalformat ‘e-crucible' this year. This enabled the Pfizer Field Force to access themagazine on their i-pad devices with rich interactive audio-visual content. The magazinealso won an award for the ‘Best Internal Magazine of the year' instituted by theprestigious Association of Business Communicators of India (ABCI).

CORPORATE SOCIAL RESPONSIBILITY

Your Company launched and took forward a rich portfolio of impactful corporateresponsibility initiatives. The programs were aligned to the Pfizer Limited CSR Strategyencompassing five key thrust areas:

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

2. 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;

3. Support Government's national and/or state programs and priorities with linkages tohealthcare;

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

5. Participate in disaster relief activities.

Some key initiatives undertaken during the year were:

1 Pfizer IIT Delhi Innovation & IP Program

Your Company partnered with the Foundation for Innovation and Technology Transfer(FITT) at the Indian Institute of Technology Delhi to launch an incubation acceleratorinitiative - Pfizer IIT Delhi Innovation & IP Program. Through funding support andresident incubation the Program encourages innovators to create healthcare innovations inand for India.

2. Impact of Air Pollution in Delhi – a partnership with AIIMS

Pfizer Ltd. has provided funding support to the All India Institute of Medical Sciences(AIIMS) towards a program that evaluates the impact of Air Pollution on children in Delhiand raises awareness around the subject.

3. Swachh Vidyalaya Campaign

Pfizer Ltd. extended its contribution towards the Swachh Vidyalaya/Swachh BharatCampaign – building and refurbishing 84 sanitation facilities in 18 schools acrossThane and Raigad districts of Maharashtra with additional funding to extend the program toDelhi Mewat (Haryana) and Lucknow (UP).

The total amount spent by the Company towards CSR activities during the year is Rs.644.30 Lakhs. Your Company was proud to fulfill 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'.

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.

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.

The Board of Directors of the Company at their meeting held on March 17 2016 pursuantto the recommendation of Nomination and Remuneration Committee appointed Mr. S. Sridhar(DIN: 05162648) as the Managing Director of the Company with effect from March 182016 for a period of 5 (five) years subject to the approval of members at the ensuingAnnual General Meeting.

The Board of Directors of the Company pursuant to the recommendation of Nomination andRemuneration Committee appointed Ms. Lu Hong (DIN: 07358719) as an AdditionalDirector (Non-Executive Woman Director) with effect from December 4 2015 who will holdthe office till the date of the ensuing Annual General Meeting. The Company has received aNotice for her candidature as a Director from a Member pursuant to Section 160 of the Act.

Mr. Aijaz Tobaccowalla (DIN: 05312126) was appointed as the Managing Director for theperiod of 3 (three) years effective August 16 2012. Subsequently Mr. Tobaccowalla wasre-appointed as the Managing Director for the period of 6 (six) months effective August16 2015 subject to approval of shareholders at the ensuing Annual GeneralMeeting. Mr. Aijaz Tobaccowalla resigned as Managing Director effective close of businesson October 16 2015. Your Directors wish to place on record their appreciation for thevaluable contributions made by Mr. Tobaccowalla during his tenure as the ManagingDirector of the Company.

Dr. Lakshmi Nadkarni (DIN: 07076164) Executive Director Human Resources resignedfrom the services of the Company with effect from September 4 2015 and also resigned fromthe Board of Directors effective the said date. Your Directors wish to place on recordtheir appreciation for the valuable contributions made by Dr. Nadkarni.

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 ListingRegulations.

Changes in Key Managerial Personnel

Mr. S. Sridhar ceased to be the Chief Financial Officer of the Company with effect fromclose of business on May 12 2015. Mr. Ravi Prakash Bhagavathula was appointed as theChief Financial Officer of the Company with effect from May 13 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.

Independent Directors' Meeting

One Meeting of the Independent Directors was held on May 5 2015 without the presenceof the Executive Directors or management personnel. At the Independent Directors Meetingheld on May 5 2015 the Independent Directors carried out performance evaluation of Non-Independent Directors and the Board of Directors as a whole performance of Chairman ofthe Company the quality content and timelines of flow of information between theManagement and the Board based on the Performance Evaluation framework of the Company.All the Independent Directors 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 makes presentationsperiodically to familiarize the Independent Directors with the strategy operations andfunctions of the Company. Your Company also circulates news and articles related to theIndustry and provides specific regulatory updates to the Independent Directors on aregular basis.

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

No. of Hours
Sr. No. Particulars of the Programs / Presentations Date Duration (Hrs)
1. New Corporate Office Site visit 09-11-2015 1
2. Presentation on Business Objectives 2015-16 09-11-2015 1
3. Presentation on Business Overview – Anti-Infectives Cardio-Vascular and Ophthalmology 09-11-2015 1
4. Presentation on Overview of Pharma Regulatory Framework in India 03-02-2016 1
5. Presentation on Manufacturing Facility at Goa Plant 03-02-2016 0.5
6. Goa Factory Visit 03-02-2016 2

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

During the year five Board Meetings and four Audit Committee Meetings were held andconvened. The details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013 and Clause 49 of the Listing Agreement read with the Listing Regulations.

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 2016 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 of the Notes to the FinancialStatements have been selected and applied consistently and judgment and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2016 and of the profit of the Company for theyear 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 for purchase of rawmaterials bulk drugs and finished goods. The same is within the limits duly approved bythe members at the 63rd Annual General Meeting.

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/Related%20Party%20Transaction%20Policy.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 2016.

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.

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. TheCompany 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 Annual GeneralMeeting till the conclusion of the 66th Annual General Meeting subject toratification by members at every subsequent Annual General Meeting.

The appointment of Messrs. B S R & Co. LLP will be placed before the members atthis Annual General Meeting for ratification. The Auditors' Report for the financial yearended March 31 2016 does not contain any qualification reservation or adverse remark.

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 the costaccounts of the Company for the financial year 2016-17 on a remuneration of Rs.10.40Lakhs. 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 their ratification. Accordingly a Resolution seekingMember's ratification for the remuneration payable to Messrs. RA & Co. Cost Auditorsis included at Item No. 8 of the Notice convening the Annual General Meeting.

The Company has filed the Cost Audit Report for Formulations and Compliance Report forthe financial year ended March 31 2015 on September 29 2015 due date beingSeptember 30 2015. The Cost Audit Report for Formulations and Compliance Report for thefinancial year ended March 31 2016 are due to be filed by September 27 2016.

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 2017. 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 2016 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

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 underClause 49 of the Listing Agreement with Stock Exchanges read with the relevant provisionsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms part ofthis Report and annexed herewith as "Annexure - H".

ACKNOWLEDGEMENTS

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 May 6 2016 Chairman