Syngene International Limited announced its third quarter financial results. Reported revenue from operations for the quarter was up 9% year-on-year to Rs. 854 crores. Profit after tax for the quarter increased 4% year-on-year to Rs 115 crores (before exceptional items).

Commenting on the quarter, Jonathan Hunt, Managing Director and Chief Executive Officer, Syngene International Limited, said, “Overall, our 9% growth in the quarter was affected by reduced funding in the US biotech segment which impacted demand in our Discovery Services Division. Our Dedicated Centers and Development and Manufacturing Divisions performed well. We are starting to see early signs of funding levels stabilizing and industry fundamentals for pharma outsourcing remain positive for the medium-to-long term.

In terms of our business strategy, we concluded the acquisition of the multi-modal biologics manufacturing facility from Stelis Biopharma Ltd and we have embarked on repurposing the facility from vaccines to biologics manufacturing in preparation for revalidation. We expect the facility to be ready for operations in the second half of fiscal year 2025, subject to regulatory approvals.”

Sibaji Biswas, Chief Financial Officer, Syngene International Limited added, “Despite some external headwinds in the US biotech segment, general industry conditions are positive and our business model remains resilient.

We will continue to invest in scientific capabilities and important enterprise projects. With strong operating cash flows, we expect these investments to be funded by internal accruals.”

Business updates

The third quarter was underpinned by positive performance in Development and Manufacturing Services as well as in the Dedicated Centers. Performance in Discovery Services was impacted by the slowdown in biotech funding.

In Manufacturing Services, the Company continued to make good progress on the long-term biologics manufacturing partnership with Zoetis.

During the quarter, Syngene concluded the acquisition of the multi-modal biologics manufacturing facility from Stelis Biopharma Ltd as announced in July 2023. The acquisition of the facility was concluded at a revised gross value of Rs 617 crores, adjusted from the earlier gross value of Rs 702 crores. The reduction in gross value reflects the retention of certain equipment not currently installed in the facility by Stelis Biopharma Ltd.  Once operational, the acquisition will add 20,000 litres of biologics drug substance manufacturing capacity to Syngene’s existing capabilities. It also includes a commercial scale, high speed, fill-finish unit, which is an essential capability for drug product manufacturing.  The facility is expected to be operational in the second half of FY25, subject to regulatory approvals.

In Discovery Services, the Company added an assay biology capability at the Hyderabad campus to complement the existing Drug Metabolism and Pharmacokinetics (DMPK) and Compound Management facilities.

Guidance

The temporary slow-down in biotech funding in the US is likely to result in sustained but slower growth in the near term. Taking this into account, we now anticipate full-year revenue growth at around double digits in constant currency compared with our earlier projection of mid-teens constant currency growth.