Making it better together. Sustainably. Sustainability Report 2019-20
2 Sustainable development is about making better choices today because the future depends on it. Our brand promise, “Make it better together” is not just a statement of what we do, but also a reaffirmation of how we do it. As we pursue our vision and business growth, we diligently integrate our social, environmental and governance responsibilities. Together with our customers, we work to bring new medicines to life faster and improve the lives of patients around the world. We do it by listening to customers, making operations ethical and sustainable with a responsible environmental footprint and respect for human rights, empowering employees to excel, and building supplier and community relationships as sustainable choices. Our first sustainability report brings our sustainable choices to life. We present the work done by us, explaining our perspectives, approach, and actions that create value for customers, employees, investors, suppliers, and the community. We present progress in areas that are material to our business, along with performance data and our key experiences in this report. That in essence is our story in this report - Making it better together. Sustainably. Sustainability at Sai Life Sciences
3 This is the first sustainability report of Sai Life Sciences Ltd. The reporting period is 2019-20 i.e. 1st April 2019 to 31st March 2020. We intend to report and publish our sustainability performances on an annual basis. This report uses Global Reporting Initiative(GRI) Sustainability Standards and has been prepared in accordance with the GRI Standards: Core option. Report Scope and Boundary: This report covers locations as mentioned below: 1. Corporate office, Hyderabad, Telangana 2. Research & Development Centre: a. Unit 2, Shameerpet, Telangana b. Unit 5, Pune, Maharashtra 3. Manufacturing facility: a. Unit 3, Bollaram, Telangana b. Unit 4, Bidar, Karnataka All information and performance data reported in this report are pertaining to above locations and boundary, unless specified otherwise. About this report 3
4 Contents
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6 About Us
7 Integrity: Doing what is fundamentally right. Respect: Treating people as we would like to be treated. Transparency: Having the confidence to share full knowledge of a problem openly. Collaboration: Delivering as a team Ownership: Taking pride in our contribution to a project, while performing as an owner. Reliability: Demonstrating consistent behaviour and striving to fulfil our commitment each time. Sai Life Sciences focuses on delivering scientific expertise with a greater purpose of a healthier tomorrow. Since our inception in 1999, we have established ourselves as a strategic partner for global innovator pharma and biotech companies and, together, work to accelerate the discovery, development, and manufacture of complex small molecules to create the medicines of tomorrow. We are driven by two cardinal principles - a belief in our purpose of ‘Science for a healthier future’ and a perseverance towards our promise of ‘Make it better together’ for our customers, partners, and employees. We stay the course with a strong commitment to our values. Our values The Sai Way Shraddha: An intense belief or conviction – towards our purpose of using science to accelerate solutions for improving life. Saburi: Perseverance or patience – to stay the course with our partners till we achieve our goals. Belief in science for a healthier future Perseverance to make it better together Integrity Transparency Ownership Reliability Respect Collaboration
8 Our service offerings We are a Contract Research, Development and Manufacturing Organization (CRDMO), and cater to our partner’s needs through a wide and growing range of services - namely drug Discovery, Development and Manufacturing of complex small molecules. Our broad service platform is tailored to meet the needs of our diverse clientele ranging from niche biotech firms to global pharma companies. We provide basic research, manufacturing services, and supply preclinical drugs for animal studies, clinical drugs for human studies, commercial and new chemical entities to Biotech Companies and Innovator Companies. Discovery Development Manufacturing Toxicology to early phase supplies Commercial supplies Mid to late phase supplies Process R&D Analytical R&D Process Engineering Process Safety Chemistry Biology Drug Metabolism and Pharmacokinetics Toxicology Early Phase Scaleup
9 100+ discovery programs Therapeutic areas 125+ Programs across US and EU, Aspire to deliver > 100 small molecule clinical candidates by 2025. Averaging 10+ years of collaborative and strategic partnerships with clients. 80+ diverse customers across big and mid-size pharma, biotechs and startups. Specialization in synthesis and medicinal chemistry aided by high quality biology, DMPK, toxicology, cGMP scale up and formulation services. Delivering complex chemical synthesis from development to commercialization. 700 Strong global R&D team across Hyderabad and Manchester, UK. 19 molecules handled from clinical phases to commercialization, 40+ projects following QbD approach. 29 Process validation completed comprising 18 APIs and 11 Intermediates. Production of high-quality APIs and intermediates that cater to highly regulated markets such as the US, Europe and Japan. USFDA and PMDA inspected facilities. 450 kiloliters manufacturing capacity, up to 25kg dedicated facility for early phase supplies and 25 tonnes commercial production scale of molecules. Dedicated Process Safety lab for evaluations throughout the product lifecycle. 9 CNS 15% Anti-viral 15% Inflamation 10% Oncology 50% Misc. 10% EU & UK 15% Asia 5% USA 80% Complex chemical synthesis from development to commercialization Discovery services spanning the entire journey from target ID and validation to IND
10 Key performance highlights Since our establishment over two decades ago, starting out as a small laboratory, we have come a long way in our quest to bring new medicines to life. Today, we are one of the fastest growing CDMOs in India, backed by committed investors TPG Capital and HBM Partners. We have been making significant investments to address the growing demand from innovator companies globally. 100+ 25+ clinical stage programs served. programs advanced from IND to phase I, II or III. 18 active commercial programs & 9 in Phase III. USA, EU, Japan USFDA, PMDA > 95% of products manufactured serve these highly regulated markets. 100% successful track record of regulatory inspections across our R&D and manufacturing facilities. 7 of the top 10 big pharma companies as well as several small and medium biotechs utilize our services. First India-headquartered CDMO to join PSCI. 1st
11 Year in review Our revenue ₹7255million Headcount 2051 permanent employees Our people 20+years of experience Fixed assets ₹6678million CSR contributions ₹15million ₹ Talented team 150 PhDs/Post Docs 1100+ Master’s degrees 200+ With tenure of 10+ years Occupational health & safety Lost time injuries and fatalities 0 ₹ Profit after tax (PAT) ₹763million
12 Facilities overview We are headquartered in Hyderabad, India. We pride ourselves in our global reach and have multiple locations across the country as well as globally. Development Centre - Hyderabad, India Our flagship R&D Centre in Hyderabad, India delivers projects involving complex chemical synthesis from route scouting, process development, scale-up to commercial scale. Manufacturing Centre - Bidar, India Manufacturing centre delivering cGMP API and intermediates for several late phase and commercial molecules across US, Europe and Japan. Discovery R&D Centre – Pune, India This 100,000 square feet discovery centre in Pune helps innovator companies accelerate their drug discovery journey from HIT to IND. Manufacturing Centre - Bollaram, India Manufacturing facility delivering APIs and intermediates for commercial molecules.
13 We invest in developing our people, our infrastructure, systems, and processes to compete in the global market. We also believe in being a responsible global corporate citizen and have taken steps to improve our HSE performance while ensuring that we continue to support and develop our local communities. Research & Technology Centre – Hyderabad, India New Research & Technology centre adjoining current R&D facility in Hyderabad augments our capabilities in providing superior scientific solutions and serves as the nerve-centre for Sai’s integrated discovery and development services to our customers globally. Process R&D Lab - Manchester, UK A process R&D and kilo lab facility focusing on complex and niche chemistries. The lab will serve to work closely with our customers across UK and EU adding value to their NCE developmental programs. Discovery Biology Lab - Cambridge, USA An 8,500 square feet lab in Cambridge, Massachusetts focusing on in vitro biology (molecular, cellular and biochemical assays) and exploratory & innovative experiments
14 Continued Investments for Making It Better Together One Manufacturing Unit in Hyderabad • R&D labs in Hyderabad • 2nd Manufacturing Unit in Hyderabad • Manufacturing Unit in Bidar – FDA inspected • Discovery Sciences in Pune • FDA inspection of GMP Manufacturing Site in Bidar • DMPK and formulation development in Pune • AAALAC Certification for animal facility in Pune • Expansion of PR&D and AR&D facilities in Hyderabad • Process safety lab added • Successful completion of 2 FDA audits • Establishment of Zero Liquid Discharge facility at Bidar • Additional Production capacity in Bidar • Discovery lab in Cambridge, USA • New Process R&D & Kilo-lab facility in Manchester, UK • Pilot scale discovery block in Hyderabad • ISO 14001 & 45001 • Incorporation of containment facilities in Pilot and Manufacturing sites - 1µg/m3 • Research and Technology Centre in Hyderabad • Early Phase facility in Bidar • Expansion of manufacturing facility in Bidar • Progressing SDG Goals 1999 2002-2004 2006-2009 2010-2016 2017-2019 2020 5
15 Awards & recognition Our initiatives in the areas of Energy Management, Health and Safety and Quality have been well recognized within the industry. We have undertaken several initiatives towards improving our operations including setting up an online learning management system, adopting green chemistry principles in process development, building all new facilities as ‘Green Buildings’, sourcing renewable energy, improving employee health and safety through industrial hygiene programs, and conducting community development programs on education and health care. EcoVadis Bronze Medal 2020 Assessment covers topics of Environment, Labor & Human Rights, Ethics and Sustainable Procurement. National Quality Award 2020 Winner of Award for 2020 in the Pharma category. National Energy Management Award 2020 Winner of 21st National Energy Award in recognition of driving energy efficient practices and reducing emissions. CII-SR EHS Excellence Award 2019 Twin wins - 5 star rating in CII EHS signifying excellence in EHS practices and runner up in Manufacturing Pharma category. 2nd SCMPro India Procurement Leadership Forum and Awards 2020 The award was in recognition of the methodologies adopted by us in business risk identification, assessment, and mitigation.
16 Establish relationships with external associations and pursue accreditations that strengthen our commitment to sustainable processes AAALAC Accreditation As a validation of our commitment to maintaining the highest standards in animal care and compliance with industry and regulatory guidelines, the discovery facility in Pune received a renewed accreditation in 2020 for its laboratory animal care and use program from AAALAC (Association for the Assessment and Accreditation of Laboratory Animal Care) International. This renewal is valid till March 2023. First India-headquartered CDMO company to join Pharmaceutical Supply Chain Initiative (PSCI), 2020 The PSCI is a non-profit business membership organization with a vision to establish and promote responsible practices that continuously improve pharmaceutical supply chains. Sai was welcomed into the PSCI community for embedding Responsible Supply Chain Management into our practices. ISO 14001:2015 and ISO 45001:2018 certification, 2020 Sai received the ISO 14001:2015 (Environment management system) and ISO 45001:2018 (Occupational Health and Safety management system) certification for its R&D centre, Manufacturing facility and Corporate office. Certified by Bureau Veritas, it reflects the organization’s commitment towards continually improving its health, safety & environment performance. ACS Green Chemistry Institute Pharmaceutical Roundtable Membership The ACS GCI Roundtable welcomed Sai Life Sciences as an Associate Member for integration of green chemistry and engineering in the pharmaceutical industry. Sai is one of the few CDMO companies to be part of this community.
17 Letter from our Chairman Dear stakeholder, Sai Life Sciences has undergone a remarkable evolution in the past twenty years and is today one of India’s fastest growing contract research, development, and manufacturing organizations. One of the most profound changes over this time has been a richer understanding and deepening of our commitment to sustainability. Integrating this understanding and our six values - Integrity, Transparency, Ownership, Reliability, Respect, Collaboration, we align our sustainability plans with the business strategy and make it intrinsic to our operating culture. Increasingly we see our people take sustainability ownership, gathering insights from internal and external stakeholders, and identifying opportunities to take action. We are steadily progressing by addressing stakeholder needs while driving business growth. Be it in getting a breakthrough in complex process development or challenging the convention and making greener processes - we take the initiative to deliver value to our customers and continuously keep environmental concerns on our radar. In the spirit of continuous improvement, we refine technology transfer and manufacturing processes to deliver on time to our customers. We reflect the same diligence in making our systems transparent, establishing quality in everything we do, and ensuring a safe work environment. We are leveraging opportunities to make a difference by supporting our suppliers and the communities where we operate to realize their potential. The momentum for sustainability is enabling us to aspire to be “best for the world” , doing more than the usual. It takes teamwork, consistent efforts to do what is best for us, our stakeholders, and society. In our first Sustainability report, we share examples of how our teams are doing exactly that. Sincerely, K Ranga Raju
18 Message from the CEO Dear stakeholder, At Sai Life Sciences, our work helps our customers serve patients better. With two decades of presence in the CDMO industry, we understand the responsibility of being part of the global supply chain of innovator companies and what it takes to be a partner of choice. We combine our deep expertise across science, quality, and HSE with operational excellence to generate sustainable value for our stakeholders. Over the past five years, we have grown consistently at 15% CAGR equally across the three verticals of discovery, clinical development, and commercial manufacture.
19 We are raising the bar as we pivot transformation across people, processes, and assets with Sai Nxt, an organization-wide initiative we began in 2019. The transformation agenda focuses on three key areas: 1. People & culture 2. Processes & automation 3. Infrastructure & scientific capabilities Our efforts are designed to propel the organization to the next phase of growth and further strengthen sustainability--- as it is the right thing to do for our business, society, and our planet’s future. It gives me great pleasure to present our inaugural sustainability report, which provides a closer look at our efforts to address the three pillars of growth-economic, environmental, and social. This report reflects our unwavering commitment to embrace sustainable choice as one thread running through everything we do. As we continue integrating sustainability in the organization, we consistently meet our goal to be a reliable partner, provide an engaging and safe workplace, identify and proactively address environmental risks. We support the UN Sustainable Development Goals (UN SDG) by championing actions to mitigate climate change and conserve energy, efficiently manage water resources, minimize pollution, advance diversity and inclusion, and promote good health, education, and livelihoods for communities. Here are some specific examples reflecting our commitment and progress towards sustainability: • Became the first India-headquartered company to join the Pharmaceutical Supply Chain Initiative (PSCI) membership embedding PSCI principles in responsible supply chain management encompassing five areas- ethics, labor, environment, health & safety into our supply agreements. • Awarded 5-Star Rating for Excellence in EHS practices at the Confederation of Indian Industry (CII) South and won National Award for Excellence in Energy Management hosted by Confederation of Indian Industry (CII) – Sohrabji Godrej Green Business Centre, for driving energy-efficient and sustainable practices reducing greenhouse gas emissions. • Increasing the adoption of green chemistry principles and instituted our inaugural ‘Green Chemistry Awards’ to recognize and celebrate teams that develop greener processes. • Inducted as Associate member into the ACS- Green Chemistry Pharmaceutical Round table. • Meeting 13% of our electricity requirement from renewable sources, reducing approximately 3000 tons CO2e of GHGs. • Zero waste to landfill from one of the manufacturing units and achieving use of 74% of hazardous waste for co-processing, exceeding our goal. • Impacted over 11,000 people through community initiatives with sustainable projects across education, health, and livelihood. As we view our core business strategy through the lens of sustainability, our focus is on optimizing operations, embedding a culture of quality, safety, and customer-centricity. The practice of stakeholder engagement is intrinsic to us and we continue to invest time and effort to listen to our stakeholders. Here are a few initiatives that illustrate integration of sustainability across our operations: • Completing regulatory audits without critical observations across all our facilities in the last two years. • Driving 100% digital transformation in Quality Assurance and Warehouse transactions for assured data integrity. • Enabling our employees to support customers with the Shop-floor Transformation initiative, which empowers and strengthens communication processes between teams along with opportunities for new ideas to gain ground. • Establishing state-of-the-art process safety infrastructure. • Instituting cloud-based platform for anytime access to customized learning with over 3000 courses for the entire organization. Looking ahead, we believe our sustainability pursuits will help us navigate challenges and create growth opportunities. This year, as our people, communities, and economies face unprecedented uncertainties due to the coronavirus (COVID-19) pandemic, we have increased our support and responded with timely actions. We are taking proactive steps to protect our people, ensure that our operations are resilient and support our customers, and extend help to the communities where we operate. We will continue to deepen our expertise, sustain a quality and safety culture and track record of regulatory compliance, pursue our commitment to collaboration, and enable all our stakeholders to thrive. We look forward to you joining us in shaping and securing a more sustainable future. Sincerely, Krishna Kanumuri CEO & Managing Director
20 Governance
21 We believe that effective corporate governance ensures transparency, which supports a strong and balanced sustainable growth. We also believe that a strong Governance structure and mechanism contributes to the effectiveness of an organization. The Board of Directors is the apex and highest governing body at Sai Life Sciences. The Board along with its Committees provides leadership and strategic guidance to the company’s management and ensures that the management adheres to high standards of ethics, transparency and disclosures. The Board’s objective is to create sustainable value for all stakeholders, provide vision to the company and oversee implementation of the Board’s decisions. Board of directors The Board comprises Executive and Non-Executive Directors that include independent professionals. The primary role of the Board is that of trusteeship to protect and enhance shareholder value through strategic oversight of Sai and its wholly owned subsidiaries. As trustees, the Board ensures that the Company has clear goals aligned to shareholder value and its growth. The Board sets strategic goals and seeks accountability for their fulfilment. The Board, as part of its functioning, annually reviews its role and also evaluates the performance of the Directors and the Board Committees. The constitution of the Board of the Company requires the Board to have a balance of skills, experience and diversity of perspectives appropriate to the Company. The Chief Operating Officer (COO) is responsible for smooth functioning of the Company’s respective businesses. This also includes development of business strategies as well as due consideration of the interests of all the stakeholders. The business strategies and plans are reviewed during the annual strategy meet by the CEO, COO and various business heads of the Company. The Independent Directors constitute nearly one third of the Board’s strength, thus ensuring independence and transparency of the Board’s decision-making process. The Independent Directors are not associated with the Company in any executive capacity. The present strength of the Board is seven, including the Chairman, Managing Director, two Investor representative Directors and three Non-Executive Directors, of which two are Independent directors, one of whom is a Women Director. The board meets a minimum of four times a year to discuss key issues and the performance.
22 To focus effectively on issues and to ensure expedient resolution of diverse matters, the Board has constituted several committees with clearly defined terms of reference and scope. Currently, there are six Board committees and the composition and the terms of reference for these committees is determined by the Board from time to time. The Board committees have been instituted for members to understand their individual responsibilities and for the Board to organize itself and perform the necessary tasks effectively. These committees ensure implementation, streamlining and monitoring, giving appropriate direction to the day-to-day working of our company activities. Effective governance through board committees Dr. K. Ranga Raju Chairman Executive Krishna Kanumuri Managing Director Executive Rajagopala S Tatta Independent Director Non Executive Nandita Gurjar Independent Director Non Executive Puneet Bhatia Director Non Executive Mitesh Daga Director Non Executive Raju A Penmasta Director Non Executive
23 Audit committee Comprises of three non-executive Directors, two of whom are independent directors. The Chairman of the committee is an independent director. The Executive Director and Chief Financial officer, representatives of Internal Auditor and Statutory auditors are invitees to these meetings. Nomination & remuneration committee Comprises of one Executive Director and three Non-Executive Directors, two of whom are Independent Directors. The Chairman of the Committee is an Independent Director. Securityholders relationship/ investors grievance committee Comprises of three Directors consisting of Executive and Non-Executive Directors. The Chairman of the Committee is an Executive Director. Corporate social responsibility (CSR) committee Comprises of one Executive Director and three Non Executive Directors, two of whom are Independent Directors. The Chairman of the Committee is an Independent Director. Independent directors committee Comprises of all the Independent Directors of the Company. Vigil mechanism committee Comprises of the members of the Audit committee
24 Sustainability governance Our governance model provides a strong foundation for developing and defining our sustainability strategy and targets. It ensures that all parts of the organization have a clear understanding of their contribution to sustainability. At the Board level, the Management Committee has the ultimate responsibility for the management, target setting, performance, and long-term success and sustainability of Sai. The VP-HSE and functional heads are responsible for tracking, reporting and review of business performance and status of sustainability initiatives and progress. The Site and Department leads are instrumental in the implementation of sustainability initiatives at the site level. • Devises Sustainability Strategy, risks and opportunity identification • Defines targets and goals • Performance monitoring Sustainability governance embedded throughout the organization Management committee • Tracking and reporting on sustainability • Reporting and communication on performance • Review of sustainability initiatives • Identify new opportunities Corporate committee • Sustainability Data and performance tracking • Implementing and driving sustainability initiatives Site level committee
25 CSR Committee In addition to the various committees that ensure the sustainability of business operations, we also have a separate Corporate Social Responsibility Committee that oversees our goals and objectives to make things better for our communities. The CSR Committee reviews, monitors and provides strategic direction to the Company’s CSR activities. The Committee seeks to guide the Company in integrating its community engagement objectives with its business strategies and assists in crafting unique models to support creation of sustainable initiatives. The Committee formulates and monitors the CSR Policy and recommends to the Board the annual CSR Plan of the Company. Code of conduct and policies There are several codes and policies framed by the Board in compliance with the Companies Act, 2013. We have code of conduct and ethics policies for all employees as well as our suppliers and partners. Our governance structure and formulated policies are designed to support legal and ethical conduct in all our operations. Our Code of Conduct policies govern the Board, Senior Management, all employees and our suppliers. Our policies reflect our values and commitments. For example, we have a zero tolerance for corruption and bribery and are committed to avoid any form of corruption in our business dealings and have therefore framed a Code of Conduct policy that also stipulates the prohibition of ‘Bribery and Corruption’. In addition, the Company has formulated a ‘Whistle Blower Policy’ to enable employees and Directors to voice their concerns anonymously without the fear of retaliation/victimization/discrimination which is a sine qua non for an ethical organization. A ‘Grievance Redressal Policy’ ensures that any issue or concern may be reported by e-mail to the contact stated in the policy. Confidentiality is the utmost concern for the Company, and we work to ensure and respect that concern. To ensure that all employees are aware of these policies, we ensure regular training and refresher sessions are provided across the organization. During the reporting period, Code of Conduct, Ethics and Prevention of Sexual Harassment and Anti- Corruption trainings were provided to all employees. In summary, the following are the key codes and policies which provide broad guidelines for the smooth and transparent functioning of the organization: • Code of Conduct and Ethics for Directors and Senior Management • Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions • Corporate Social Responsibility Policy • Performance Evaluation/Promotion Policy • Appointment and Remuneration Policy • Whistle Blower/Vigil Mechanism Policy • Code of Conduct and Ethics for Employees • Code of Conduct and Ethics for Suppliers • Policy for Prevention of Sexual Harassment • Grievance Redressal Policy In addition, audits are also carried out by our in-house internal audit team to ensure implementation and adherence to our policies and suggestions. Special audits are also performed in areas that may be vulnerable to fraud and corruption and other significant risks are identified on a regular basis.
26 Risks and opportunities We recognize that risk management is an important aspect for sustainable growth and have therefore put processes in place that would help with the early identification of risks and its mitigation. Opportunity assessments are an inherent part of our business and are embedded in our internal business planning and decisions for setting short and long term goals. To mitigate financial risks, we have an Internal Financial Control Framework which is in line with the mandate of Section 134(5)(e) of the Companies Act, 2013. This framework ensures that financial controls are adequate and operating effectively for the efficient conduct of business, safeguarding of assets, compliance to company policies and prevention and detection of frauds and errors. The Company has a transparent framework for periodic evaluation of the Internal Financial Controls in the form of internal audit exercise carried out through the year, thereby reinforcing the commitment to adopt the best corporate governance practices. Risk management process and governance As a fast growing CDMO company, Sai is exposed to a wide range of internal and external risks that could significantly impact the achievement of our financial and nonfinancial objectives. Risk management is therefore an integral part of corporate management. As an organization, we promote strong ethical values and high levels of integrity in all our activities. Our standard operating process identifies and mitigates risk at an early stage. Process level controls cover key operating, financial and compliance related areas and our values, code of conduct ensure that we conduct our business with integrity and ethics. Strong audit and control mechanisms combined with internal financial control systems provide additional controls against possible risks. Compliance and Regulatory Ensure compliance with local law and regulations. Proactively address queries or concerns. Long term partnership with customers Ethical business practices that ensure reputation and continued investments to provide value added services. Competitiveness Product differentiation, remain cost competitive by optimizing production processes. Pharmaceutical Market Consolidation Proactively assessing impacts of M&A activity. Risk, opportunities & mitigation
27 The Board of Directors, monitor and review the strategic risk management plans of the company as a whole. They set the overall tone for a risk minimization culture through defined and communicated corporate values, clearly assigned risk mitigation responsibilities and appropriately delegated authority. A strong and independent Internal Audit function at the corporate level carries out risk focused audits across all businesses, enabling identification of areas where risk management processes may need to be strengthened. The Audit Committee of the Board reviews Internal Audit findings and provides strategic guidance on internal controls. Foreign Currency and Interest Rate Exposures Use derivative financial instruments or other hedging techniques to cover potential exposure. Restrictions in Securing Credit Facilities Finance team monitor and ensure covenants and conditions laid down in the financing agreements are met. Protecting Intellectual Property Rights (IPR) Compliance with IPR of third parties, operate without infringing upon the proprietary rights of others. Information Technology (IT) IT security framework to guard assets, continuous monitoring to assess critical impacts. Acquire, Retain Talent for Business Continuity Strategic talent and succession management, skill gap analysis and capability development activities. Customer Supply Disruption Active monitoring and mitigation of concerns to ensure customer satisfaction. Raw Material Supply Interruptions Develop alternative suppliers on an ongoing basis. Health, Safety and Environment (HSE) Proactively engage with regulatory authorities, HSE team monitor & address HSE hazards through periodic safety audits and training programs.
28 Sustainability framework + Materiality
29 Defining materiality Engaging with our key stakeholders is essential to build trust and to understand their needs. We seek to listen to them, know how we can address their concerns, and develop solutions for significant issues. 1. Identifying key topics from the sustainability context The sustainability context for CDMOs highlights the need for flexible, responsive operations and technically superior solutions to enable pharmaceutical companies to pursue innovation to serve patients better. The need is to reach the market faster by de-risking discovery, development, and manufacturing in the NCE development value chain while focusing on meeting and exceeding quality, safety, and environmental standards as pre-requisites. CDMOs are expected to be environmentally responsible as pharmaceutical companies gather pace for climate change action in their own and their supplier organizations. Besides, CDMOs also need to focus on people, infrastructure, automation, and technical capabilities, to accelerate services and enable pharmaceutical companies sustain better drug commercialization with new technologies and approaches. With this background, we undertook the process of identifying key topics, also integrating findings from research of sector-specific reports, review of GRI standards, and sustainability reports of pharmaceutical companies and inputs received from internal stakeholders. Our process of carrying out stakeholder engagement and arriving at material focus areas is presented here: 1 Identifying key topics that have significant organizational impact 2Identifying key stakeholders 3Conducting stakeholder interviews to gather feedback on key topics 4Materiality assessment
30 2. Key stakeholder identification We consider stakeholders as an integral part of our organization. The following factors guided our approach in identifying our key stakeholders: • Stakeholders impacted either positively or negatively from our practices • Potential beneficiaries of our work • Any groups/individuals with the influence on our operations • Groups/individuals interested in sustainability policy and initiatives 3. Stakeholder interviews We used a combination of interviews and survey questionnaires to seek feedback from our key stakeholders. We engaged with 70% of the identified stakeholders. We also have other processes and platforms to engage with our key stakeholders in the course of regular activities, which offer us opportunities to gather further insights. Stakeholders Engagement mechanism Topics discussed Employees • Employee engagement activities • Committee meetings • Employee satisfaction survey • One to one discussion • Workplace conditions & safety • Organization performance and goals • Training requirement & career development Customers • Project review • Customer visits & audits • Customer feedback survey • Delivery • Quality • Practices followed at the facility including HSE practices
31 Stakeholders Engagement mechanism Topics discussed Suppliers • Supplier evaluation & audit • Supplier forums • Quality • Pricing • On time delivery • Practices followed at supplier site including HSE, statutory & labor practices Communities/NGOs • Baseline assessment survey • Impact measurement • One to one discussion • Community requirement • Program impact Government/Regulators • On site visits • Regulatory updates/requirements Investors • Board meetings • Investor meetings • Organization performance & Improvements • Organisational strategy Groups/Individuals Interested in sustainability practices • Association/Membership forum meeting • Events & Conferences • Sector specific trends • Knowledge sharing • Collaboration and partnerships 4. Materiality assessment A materiality assessment helps us define focus areas from among the key topics and the insights shared by our key stakeholders and enables our business to aim for positive impact. The topics identified through stakeholder engagement were prioritized, considering the impact on stakeholders and the impact on our business to generate the Materiality matrix. The matrix provides us direction for sustainability reporting and to derive our sustainability framework and goals.
32 The focus areas which are material to our stakeholders and our business are grouped to create a framework of sustainable choices for approaching sustainability and integrating it within our organization. Materiality matrix Significance to business Significance to stakeholders Low High High Low Medium Medium 1 3 2 4 10 5 9 8 6 7 11 12 13 14 Operational excellence 4 Marketing 14 Product & service labelling 13 Product responsibility 12 Customer health & safety 11 Business growth 10 Responsible supply chain 9 Collaboration and partnerships 8 Stakeholder engagement & communication 7 Training & awareness 6 Social accountability & safe workplace 5 Business ethics, transparency & governance 3 Employment relationship 2 Environment protection 1
33 Sustainability framework Sustaining as a partner of choice Moving away from Transactions towards Alignment and Engagement Becoming a neighbour of choice Moving towards positive, proactive community connection Growing as an HSE champion of choice Moving away from TakeMake-Waste and excelling in HSE performance Being an employer of choice Moving towards learning, diversity, empowerment, performance Approaching Sustainability
34 Sustainability framework Our approach to sustainability is made up of choices that make a difference. A sustainable choice to us embodies thinking and actions that are economically, environmentally, and socially aligned. Every choice we stand for enables us to tune into our key stakeholders and the natural environment, setting us up for success. 01. Sustaining as a Partner of choice As a partner of choice, we stand for alignment and engagement, forming collaborative relationships with our customers and supply chain partners. We provide customized solutions for meeting aggressive timelines and budgets and growing regulatory needs of customers. We offer a compelling value proposition as a full-service, pure-play CDMO with a long-standing track record of service. Our comprehensive range of services across the NCE development value chain along with quality and HSE management designed to meet global standards maximizes our flexibility to add value. With proactive project management and communication systems, we use our technical strengths to create collective expertise, and through planned processes with our supply chain partners, we consistently meet the delivery requirements of customers. Business Growth I Collaboration & Partnerships I Operational Excellence I Responsible Supply chain 02. Growing as an HSE champion of choice Learning and growing as an HSE champion of choice, we lead by example, make HSE 24/7, and influence positive change with new ideas. We are fully committed to integrating the latest HSE standards while we partner with our customers. By undertaking the systematic implementation of process safety and industrial hygiene evaluations, and environmental risk assessment, we ensure that we champion people’s safety and capabilities to handle hazardous operations. Our governance approach and felt leadership make us effectively deliver on our environmental responsibilities and nurture a culture of safety. Environment Protection I Safe workplace.
35 03. Being an Employer of choice The essence of being an employer of choice is the quality of the employment relationship based on our core values of respect, transparency, and integrity. Being part of the innovation value chain, our people play an important role in problem-solving and co-creating solutions for technical challenges. The presence of a cross-functional team environment is a core building block that makes collaborating together enriching for our customers and us. It is further enhanced by creating a learning culture that keeps our employees technically and behaviorally adept at creating differentiated experiences for our key stakeholders. Employment Relationship I Training & Awareness I Social Accountability & Safe workplace. 04. Becoming a Neighbour of choice Becoming a neighbor of choice is driven by our commitment towards a collective impact improving people’s quality of life in the communities in the neighborhood of our operations. Adopting an approach of understanding the community needs, making them part of the solution, and partnering with non-governmental organizations (NGOs) helps us take a balanced and sustainable approach. Social Accountability – Communities
36 We have mapped here each material topic in our context. Material topics Internal and external boundary Sustaining as a Partner of choice Business Growth Responsible supply chain Partnerships & Collaborations Operational Excellence Corporate office, Manufacturing, R&D, Program management, Quality, Governance, Supply chain, Business development Stakeholder engagement & communication Business Ethics, Transparency & Governance Suppliers, Employees, Investors, Community, Customers, Government/Regulators Being an employer of choice Employment Relationship Social accountability & Safe workplace Training & Awareness Corporate office, Manufacturing, R&D, HR, Quality, HSE Growing as an HSE Champion of choice Environment Protection Safe workplace Corporate office, Manufacturing, R&D , supply chain, HSE Becoming a Neighbour of choice Social accountability Manufacturing, R&D, community engagement
37 Guided by our sustainability framework, we have framed Sai’s Sustainable Development 2022 goals from the 2019 baseline, mapped to the material areas. Based on the goals, organization-wide initiatives and action plans are ongoing and tracked for progress. The Sustainable Development Goals (SDGs), launched by the United Nations in 2015, represent an action plan for the planet and society to thrive by 2030. We recognize the responsibility of businesses in contributing to the UN SDGs and have mapped Sai’s Sustainable Development Goals to 10 UN SDGs. Sai’s Sustainable Development Goals (SDGs) Environmental protection Diversity & Inclusion Responsibly supply chain Community “Across all our operations, our approach to sustainability is guided by a principle of going beyond just compliance and doing what is right for the community and the environment. We believe that such an approach is completely consistent and intrinsic to our progress in business as well, and therefore constantly strive to instil this mindset in our people.” Sivaramakrishnan Chittor Chief Operating Officer
38 Sustaining as a Partner of Choice
39 We are currently serving seven out of the top 15 global pharmaceutical companies. We are well-positioned to pursue our vision and are currently associated with the launch of six molecules, with three molecules in the commercial phase. Guided by the insights and feedback from our customers, we have embarked on a transformational journey, investing upwards of USD150 million, in enhancing operational excellence, flexible manufacturing, IT integration and advanced safety and quality systems. Our customers seek to de-risk R&D efforts and increase the speed to market of their new molecules. Working together with them in accelerating discovery, development, and manufacturing, our purpose is to realize cost efficiency, speed, responsiveness and flexibility along with scale, doing so sustainably, as a partner of choice. Sustainability in focus • Vision to support launch of 25 new medicines by 2025. • Invest in transformation of processes, infrastructure, capabilities, culture over the period between 2019 and 2023 as a part of Sai Nxt and also raise the bar on safety, quality and customer focus. • Shape our operating framework across R&D, technology transfer, and manufacturing to consistently deliver on our customer commitments with stronger governance systems and enhanced productivity and efficiency. • Perform competency profiling and risk assessment for all critical raw material suppliers. Sai Nxt: Transforming to support our customers and create value for patients Moving away from transactions to alignment and engagement Organization-wide transformation initiative currently underway with investment of > US $ 150 Mn People & Culture Expanding scientific talent pool, inducting top-notch global scientific and leadership talent, role-based integrated online training, shop floor transformation, nurturing culture of excellence. Processes & Automation Process simplification, strengthening governance systems, electronic manufacturing records, IT systems integration, foundation for seamless data capture across operations, leveraging latest technologies for innovation and intelligence. Infrastructure & Capabilities R&D expansion with wider suite of technology platforms, early phase delivery facility, flexible manufacturing with 2.5x capacity, advanced safety & quality systems. USD millions FY22 FY21 FY20 FY19 FY18 47 62 115 140 154 increase in net fixed assets over 4 years 3x
40 Partnering with purpose Our efforts to strengthen our foundation and pursue purposeful actions in R&D, Supply chain, Quality, and Manufacturing, including upgrading infrastructure and capabilities, add value to the customer experience. These are the key elements that build a successful collaboration and help build our reputation as a partner of choice. 01 Quality & regulatory track record Sai has a robust Quality system across the value chain from drug development to drug delivery. To sustain as a partner of choice, among many other elements, our quality systems and consistent success in regulatory audits contribute immensely as a trust factor. Quality & Regulatory track record 1. 2. Integrating broader capabilities and deep expertise in research & development Culture of responsive and flexible manufacturing in the shopfloor 3. Securing the supply chain “SaiGO is our flagship initiative to drive effective governance and operational excellence at Sai Life Sciences. Through our focus on this initiative, we drive significant contributions towards sustainability by improving material efficiencies, simplifying processes to make them nimble and efficient and thereby helping bring medicines for unmet medical needs faster to market. It also serves as the invisible glue that brings alignment in the entire organization towards our vision, mission and societal commitments.” Damodharan S Chief Strategy Officer
41 Robust quality system designed to meet the global standards We have a robust governance process with periodic reviews at the operations level and by Corporate QA function and the management committee (CEO, COO and BU Heads). Our successful track record of completing regulatory audits without critical observations across all our facilities in the last two years proves to be a constant encouragement for our partners. We have had successful inspections by various regulatory agencies like USFDA, PMDA, COFEPRIS and WHO. We believe customer confidence in our quality system across development, technology transfer, and manufacturing is sustained, with 80% repeat customers. Quality Management Procedural Facility People/ Culture Robust Quality System Moving towards paperless quality environment with e-BPR/QMS documentation 100% track record of successful inspections by USFDA, PMDA, COFEPRIS, WHO etc 21 CFR part 11 Controls & DI Compliance GMP Pro & Electronic Laboratory Notebooks across the organization QMS Compliance Focus & Comprehensive Assessments Knowledge Management & continuous strengthening of Quality Management system Three pillars of quality management system As a part of continual improvement, we emphasize strengthening the Quality Management System’s three pillars, i.e., Procedure, People, and Facility. One of the approaches includes implementing various technologies and associated training through a dedicated platform in our Learning Management System (LMS). We proactively assess our systems against the current guidelines, 483 and warning letters issued to various pharmaceutical industries, and upgrade our quality system concurrently.
42 In our quality management approach, we are transforming several areas of operations from manual to electronic for better transparency and assured data integrity. A journey we began in the year 2014 is 60% complete and functional, with the ongoing addition of modules in Quality Control/Manufacturing taking it to 80% completion in the reporting year. At present, we have 82 modules across Quality, materials management, and document management systems enabling electronic transactions, including vendor approval, documentation of OOS, Deviation, master BPR and change control. With the inclusion of other areas in Quality Control/ Manufacturing carried out electronically, we will complete 100% digitalization. In 2019-2020, 33 customer audits were concluded without any critical observation. For us, customer audits are as essential as regulatory audits as they ensure that we are audit-ready, investing in continual improvements, and accordingly, customer requirements have the most significance in our operations in line with their regulatory commitments. Step 1 Responsible for capturing information and act as a data source. Step 2 Read, evaluate, control and allow users to do right things in right direction. Step 3 Receive data and generate labels, control planning and reconciliation.
43 • Quality systems for change control, customer complaints, nonconforming product control, recall, and a system to inform the customer of significant changes are robust • The facility is well-equipped, well maintained with cross-contamination controls and a plan to remain updated about cGMP requirements • Personnel are competent to manage site operations, knowing procedures, equipment, and protocols within their area of responsibility, and comply with cGMP requirements • Actions towards paperless operations, including GMP-Pro is encouraging We have a well-established procedure based on the various regulatory guidance to address customer complaints. The handling of a complaint is a time-bound process that involves acknowledging the complaint, investigation followed by implementation of CAPA where required, and finally, the closure of complaint addressing the customer’s concern. Facility (April-2019 to Mar-2020) No of customer complaints Status Unit-II 0 N/A Unit-III 0 N/A Unit-IV 5 Closed (no failure in the quality attribute of the product) Customer observations positively reinforce our approach to quality management Customer Complaints
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