Syngene full-year revenue from operations up 19% to Rs. 2604 crore

Revenue from operations up 15% to Rs. 758 crore in fourth quarter

Syngene International announced its fourth-quarter and full-year results. The company reported revenue from operations up 15% to Rs. 758 crore for the fourth quarter and up 19% to Rs. 2604 crore for the full year ending 31 March 2022. Profit After Tax for the quarter, before accounting for exceptional items, was up 7% year-on-year to Rs. 148 crore and Profit After Tax for the full year was up 10% to Rs. 421 crore.

Commenting on the results, Jonathan Hunt, Managing Director and Chief Executive Officer, Syngene International Limited, said, “I am pleased with the strong finish we had to the year and that we delivered results at the high end of our upgraded guidance range.

Reflecting on the pandemic period, we created more than 1000 new jobs in the last two years and gained more than 100 new clients in the last year. We also extended and expanded our long-term partnership with Amgen Inc. and continued to invest in new capacity and technology to underpin future growth.

Looking ahead, we see growing demand for research, development and manufacturing services around the world and we are well-positioned to take advantage of these new opportunities.”

Fourth quarter business update

The fourth-quarter growth was driven by solid delivery across all divisions: Development Services had a particularly strong quarter as it caught up on projects postponed due to supply chain delays and other Covid-related disruption, in addition to planned work.

Phase three of the expansion plan at the Hyderabad research facility was completed during the quarter. The company commissioned the first phase of the facility in February 2020 and phase two was completed in November 2021. With the completion of phase three, the facility now accommodates approximately 600 scientists and further expansion is planned in the year ahead.

Full year business update

The research-based divisions, Discovery Services and the Dedicated Centres have delivered sustained growth throughout the year. SynVent, Syngene’s Integrated Drug Discovery (IDD) platform, continued to expand business from existing clients and attract new clients, particularly from the emerging biopharma segment. It made a positive contribution to Discovery Services during the year as the number of IDD projects increased by ~40% compared to the previous year.

The company signed an extension of the long-standing, multi-discipline research collaboration with Amgen to the end of 2026. In addition to operating the existing Syngene Amgen R&D Center, under the new contract the company will also build and operate a dedicated laboratory to accelerate the scale-up of small molecule projects.

The focus on the Development and Manufacturing businesses included expanding the biopharma manufacturing capacity by commissioning a cGMP microbial facility and expanding the mammalian cell manufacturing facility. In small molecule development services, the oligonucleotide and highly potent API capabilities were both extended and plans are on track for the Mangalore manufacturing plant to achieve a major regulatory approval thus opening it up to a broader scope of projects.

Throughout the year, Syngene worked with clients on diagnostics, treatments and vaccines related to the coronavirus. The company manufactured remdesivir under a voluntary licence from Gilead. This manufacturing will continue for as long as the pandemic persists.

FY23 guidance

Overall revenue from operations for FY23 is expected to grow in the mid-teens. In light of the positive demand environment for CRO and CDMO services, the company expects to step up investments in new scientific capabilities, IT/ digitisation and commercial activities. This step-up in investment, along with the resumption of travel and other business activities post-pandemic in an inflationary environment, is likely to put pressure on margins during the course of the year. In aggregate, the company expects to deliver an EBITDA margin around 30%.

With the SEZ tax benefit for key operating units reducing this year and in the coming years, the company expects the effective tax rate to increase by 200 to 300 basis points in FY23, creating some dilution in the PAT margin, resulting in a single-digit PAT growth rate for the full year.

With this step up in operating investment, the Company expects to be well-positioned and anticipates seeing improved growth and operating leverage from FY24.