Trade Policy - The Trump administration announced it will not impose tariffs on generic drugs from foreign countries [1] - Generic drugs account for the majority of medications dispensed in the U S [1]

Market Overview - Indian stocks experienced a decline, with the Sensex and Nifty extending losses for the sixth consecutive session, primarily driven by concerns over new tariffs imposed by U.S. President Donald Trump on pharmaceutical products [15][16] - The S&P BSE Sensex fell by 235.99 points, or 0.29%, opening at 80,923.69, while the NSE Nifty 50 decreased by 80.35 points, or 0.32%, opening at 24,810.50 [15][16] Pharmaceutical Sector Impact - The Nifty Pharma index dropped 2.3%, with all constituents trading lower; Sun Pharma fell 5% to a 52-week low, while Biocon and other major pharmaceutical companies also experienced declines [15][16] - The U.S. accounts for over a third of India's pharmaceutical exports, which mainly consist of low-cost generic drugs; shipments to the U.S. increased by 20% to approximately $10.5 billion in FY25 [3][15] Tariff Announcements - President Trump announced a 100% tariff on branded and patented drugs and a 25% tariff on heavy-duty trucks, effective October 1, which has negatively affected market sentiment [4][16] - Analysts suggest that while India, as an exporter of generic drugs, may not be immediately impacted, there are concerns that future tariffs could target generic drugs, potentially affecting pharmaceutical stocks sentiment [7][16] Broader Market Trends - The midcap and smallcap indices also fell, by 0.8% and 1.2% respectively, reflecting a broader market decline [4][16] - Asian stocks declined overall, with significant losses in pharmaceutical shares following the tariff announcements, indicating a regional impact on the sector [10][11] Institutional Investment Activity - Foreign Institutional Investors (FIIs) sold equities worth over ₹4,995 crore on September 25, while Domestic Institutional Investors (DIIs) were net buyers of ₹5,103 crore [12][16] Technical Analysis - Technical analysts indicate that the market is near the 20-day Simple Moving Average (SMA), suggesting a potential pullback; however, if upswings are limited, the downside objective could extend to 24,680 [9][16]

Financial Data and Key Metrics Changes - The company reported core earnings growth in the low double-digit percentage range, which is consistent with the impact of acquisitions and despite the loss of the Optum contract [5][11] - The pharma segment, particularly pharma and specialty solutions, had a strong year with 11% growth in the quarter and 12% for the year [21][70] - The company anticipates a slower growth rate moving forward, although still above normalized long-term rates [11][12] Business Line Data and Key Metrics Changes - The distribution business has grown consistently at mid-teens rates, significantly above market growth [8] - Biopharma solutions, which are higher margin parts of the specialty business, have been growing around 20% and are expected to reach about a billion-dollar business by fiscal 2028 [9] - Generic products have shown stable growth rates of 2% to 3%, with expectations of increased value from the loss of exclusivity of branded products in the next three years [29] Market Data and Key Metrics Changes - The company is confident in the underlying demographic trends that support growth, despite potential policy changes impacting Medicaid funding [25][24] - The retail pharmacy market remains important, with independent pharmacies benefiting from volume, although they face challenges on the reimbursement side [32][33] Company Strategy and Development Direction - The company is focused on diversifying its business to ensure participation in the fastest-growing parts of the market, particularly in specialty areas [13] - Recent acquisitions, such as Solaris, are seen as strategic additions that align with the company's focus on autoimmune and urology sectors [41][42] - The company plans to prioritize organic investments while maintaining a strong balance sheet and returning capital to shareholders [72][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the rising tide of utilization trends and the effectiveness of their operational strategies [11][12] - There is awareness of potential impacts from policy changes, particularly regarding Medicaid and COVID vaccine restrictions, but overall confidence in the business model remains strong [25][12] - The company expects to manage any potential impacts from the most favored nations policy, viewing them as relatively minor [58][59] Other Important Information - The company has raised its share repurchase program from $500 million to $750 million, committing to $1 billion in capital deployment back to shareholders annually [72][73] - The integration of the ADS acquisition is expected to create significant synergies, increasing revenue without heavily impacting distribution capacity [62][63] Q&A Session Summary Question: What are the key factors driving strong performance? - Management highlighted broad-based utilization trends and effective operational execution as key drivers of performance [6][7] Question: How does the company view the impact of COVID vaccine trends? - Management indicated it is too early to provide specifics but expects a slight headwind from COVID vaccine contributions compared to previous years [15][16] Question: What is the outlook for the retail pharmacy market? - Management noted that while independent pharmacies face reimbursement challenges, they benefit from volume and the company's advocacy efforts [32][33] Question: How does the company plan to deploy capital moving forward? - The company will focus on organic investments, maintaining a strong balance sheet, and returning capital to shareholders while remaining opportunistic about acquisitions [72][73]