Great Joy Pharmaceutical Limited (GJPL) is a listed company headquartered in Mumbai, Maharashtra. Established in 1985, it is a specialty generic…

Great Joy Pharmaceutical Limited (GJPL) is a listed company headquartered in Mumbai, Maharashtra. Established in 1985, it is a specialty generic pharmaceutical company, with a wide product portfolio that has both branded and generic medicines. These medicines cover cardiology, gastroenterology, diabetology, oncology, ophthalmology, dermatology, nephrology, respiratory diseases, and over-the-counter medicines among others. It is one of the largest pharmaceutical companies in India and is also considered a large pharmaceutical company globally. It has manufacturing facilities both within India and across the globe. For FY 2024-25, it reported revenue close to $7 Billion US Dollars, employing almost 50,000 people across the globe. They have market presence within India and in major markets abroad like United States, Canada, Australia, Japan and few other European countries. The branded medicines are a portfolio of patent protected medicines, which has been nurtured by GJPL over many years by investing heavily in research and development. The aim of this evolving business is to improve medical outcomes for patients by either meeting unmet demands or by enhancing patient convenience through differentiated dosage forms. Due to better availability of skilled talent for research and development, this portfolio has been built primarily from its research and development centers located within United States, Europe and India. Generic medicines are those drugs that contain the same chemical composition as the originally patented (branded medicines). They work in the same way and provide the same clinical benefits as a branded drug. However, companies other than the original patent holder do not have the right to manufacture the drug until the patent expires. As stated above, the patent provides the original innovator with the first mover advantage and their reward in the form of this monopoly helps them recoup their investment made in researching and developing this medicine. However, once the patent expires, other players in the industry can use the technical know-how to manufacture medicines that provide the same efficacy and clinical outcomes – these “off-patented” medicines are generic medicines. Unlike branded medicines, there are generally many companies that produce generic medicines and hence the competition is much higher. Few examples of GJPL's product portfolio are given below: Viva Light is a multivitamin tablet that is an over-the-counter generic medicine used for vitamin deficiencies. There are other companies that produce similar tablets that have the same efficacy and clinical treatment.Surgicure is a branded oncology product that is used in cancer treatment. Usage of this medicine has made remarkable improvements to clinical treatment of end user patients. GJPL is the original patent holder of this drug, the term of which has not yet expired thereby giving the company complete monopoly over the product production and sales.Soothing Touch is a generic medicine that is used to treat burn victims. This is an improvement of the original branded medicine Coldsalve, whose patent was until recently held by GJPL's competitor. Although similar to Coldsalve in its clinical efficacy, some improvements were made to the chemical composition during the development of Soothing Touch. This helped end user patients to benefit from faster recovery time as compared to Coldsalve. Within the last two decades, India has developed as a major hub within the pharmaceutical industry, it is now known as the “Pharmacy of the World” as it supplies medicines across the world. As mentioned earlier, GJPL has a large market presence in United States, Canada, Australia, Japan and few other European countries. Some of the products are exported from India, while some medicines are manufactured from facilities owned by GJPL in these countries. There are certain other countries like Mexico, Brazil and Argentina, where GJPL does not have much presence. Therefore, it hires the services of sales agents in markets in order to sell the products that it exports from India to these countries. For their services, GJPL, Mumbai pays commission for their services. Over these years the availability of skilled talent within India for specialized roles in pharmaceutical research has improved. Therefore, GJPL has been increasing its investment in its research and development center within India, which is located at Mumbai. In addition to spending on in-house research, the company provides grants to various Indian universities, government institutions and recognized companies to conduct certain research and development activities on its behalf. These grants are utilized for various scientific programs. For tax purposes, these are notified under relevant sections by approved income tax authorities. Mr. Jay Pradhan has recently joined as an intern in the accounting team at the company headquarters. He has been assigned to the team that manages direct and indirect taxes operations of GJPL. Refer to Annexure 1 for certain clarifications he needs from Ms. Hiral Mehta, his immediate senior and the manager of the team, regarding certain income tax issues. Actions within GJPL that threaten public safety CA. Shirish Madan, Director-Finance of Great Joy Pharmaceutical Limited (GJPL), in September 2025, came across certain suspicious payments made by Mr. Aakash Jain, Director-Research and Development. Upon further investigation, it was revealed that these payments were bribes made to a group of scientists and lab technicians to suppress adverse findings discovered during the clinical trials of Metapace, a neurological drug under development. According to the scientists, these adverse results indicated potential negative impacts on patient health, and they had recommended halting further development of the drug. However, GJPL had already invested approximately 150 crores in this project. Under pressure to deliver path-breaking medicines and secure a significant share in the global branded drug market, Mr. Aakash Jain, between January and June 2023, allegedly paid bribes and inducements to suppress reporting of the adverse results. As a result of this suppression, the drug received regulatory approval, and a patent was registered in the name of GJPL in September 2024. GJPL has since commenced commercial production of Metapace from December 2024. Licensing agreement between GJPL and YLL The Indian pharmaceutical industry has been steadily growing in the last decade. GJPL has been expanding its manufacturing operations within India in order to take advantage of newer opportunities. In order to deliver better results, it has divided its portfolio into core-products and non-core products. All core products will be manufactured in-house, while some of the non-core products can be manufactured by third party manufacturers by licensing out the patent. In FY 2024-25, GJPL's research and development team at Mumbai developed Healbeat, a new drug for patients with cardiac problems. It is a revolutionary drug that can bring substantial benefits for patients. The drug is now a registered patent in India under the Patents Act, 1970. The total cost of developing the drug was 100 crore. Out of this 80 crore was incurred in India, with the balance being incurred overseas. GJPL considers cardiology related medical production was part of its “non-core” product portfolio. In order to concentrate on its core product portfolio, GJPL decided to license out its patent to Your Life Limited (YLL), another Indian pharmaceutical company for a period of 3 years. As per the agreement entered into in Jun 2025, GJPL will receive royalty income based on the sale of Healbeat. The royalty will approximately be 60% of the sale revenue generated under the agreement. This way it can recoup the cost of research and development that it incurred to discover and patent the medicine. YLL will have complete control of production, marketing and sales, including the pricing of the drug. YLL has been given the right to sell Healbeat only within India. Market for Healbeat was steady until reports started emerging of untoward incidents relating to quality of the medicine that resulted in deaths of end user patients. Please refer to Annexure 2 for further details. Acquisition of Blueprint Pharmaceutical Limited (BPL) GJPL acquired BPL, a rival pharmaceutical company for 230 crores on June 1, 2025. BPL is based in Kolkata, West Bengal, Its product portfolio is similar to that of GJPL. The plant was acquired in order to expand its operations in West Bengal and the eastern part of India, where it has limited presence. At the time of acquisition, BPL is the defendant in a court case whereby certain customers of BPL have alleged usage of one of their drugs, Clear Air which caused irreversible harm to the lungs. BPL is being sued for damages of 30 crores. BPL has indemnified GJPL for the losses, if any on account of the court case to the tune of 25 crores. The fair value of the liability is 22 crores. Annexure 1 Jay Pradhan / Management Trainee, GJPL From: "Jay Pradhan" [email protected]; Sent: 3rd May 2026 19:00 To: "Hiral Mehta" ; Cc: Subject: Clarification on Tax Treatment of Certain Expenses Date: 3rd May, 2025 Dear Ms. Mehta, While reviewing the working files and records relating to direct and indirect taxes, I have come across certain items that require clarification. These include research and development payments made during F.Y. 2024-25, as well as two tax matters of F.Y. 2023-24 where the Assessing Officer has raised demands. I would be grateful for your guidance on their tax implications. (i) Research and Development Expenditure - During F.Y. 2024-25, GJPL incurred various expenses towards research and development within India. A contribution of 5 crores was paid to the notified and approved Indian Institute of Science, Bangalore, which is a public university renowned for its scientific research activities. Another contribution of 4 crores was made to IIT, Delhi for an approved scientific research program. In addition, a grant of 2 crores was given to Healthy India Limited, a company registered in India with its principal objective being scientific research and development, duly approved by the prescribed authority. Further, the company incurred expenditure on its in-house scientific research and development facility approved by the prescribed authority, comprising revenue expenditure of 8 crores, and capital expenditure of 25 crores, of which 10 crores relate to the cost of acquisition of land. (ii) As discussed earlier, GJPL is governed by the normal provisions of the Income-tax Act and has not opted for the concessional regime under sections 115BAA or 115BAB. Commission to Overseas Agents (F.Y. 2023-24)- In F.Y. 2023-24, GJPL paid commission to several agents abroad for facilitating sales of its products in markets such as Mexico, Brazil, and Argentina. These agents are non-residents, have no income accruing or arising in India, and hence are not liable to tax in India. Accordingly, no tax was deducted at source on such payments, nor was any application made under section 195(2) for nil deduction. On assessment, however, the Assessing Officer has taken the view that tax should have been deducted at source and has therefore proposed to disallow the commission expenditure of 25 crores. I seek your advice on whether this position is legally sustainable. (iii) Freebies to Medical Practitioners (F.Y. 2023-24)- During the same year, GJPL incurred an expenditure of 5 crores towards providing freebies to medical practitioners within India. The Assessing Officer has disallowed this expense as not being deductible for tax purposes. Please advise whether this position is correct. Thank you for your kind guidance. Yours sincerely, Jay Pradhan Annexure 2 The News Substandard drug tragically claims the lives of 25 patients Mumbai, 15th October 2025 – Your Life Limited (YLL) is a pharmaceutical company that manufactures and sells the blockbuster drug Healbeat, a cardiovascular drug that has successfully transformed the lives of many patients. The original patent holder for Healbeat is Great Joy Pharmaceutical Limited (GJPL). As per the licensing agreement between the companies, YLL has exclusive rights to manufacture and market the drug. In return GJPL earns substantial royalty on sales. Recently, the regulatory authorities have received various complaints about the quality of Healbeat medicine that is manufactured by YLL. On further investigation it was found that the certain Active Pharma Ingredient (API), which is the main chemical compound for the medicine, is of substandard quality. The API has been procured from an external supplier by YLL. Unfortunately, the use of substandard APIs in its production of Healbeat has resulted in certain tragic loss of lives in recent months. YLL now faces certain litigation and penalties filed against it with the regulatory authorities.