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The strong quarterly performance by Syngene International set the tone for the company achieving its annual guidance of high teen growth during FY24. The revenues from operations at 786 crore grew 23% year-on-year during the third quarter taking the nine months revenues growth to 19% year-on-year.

The same was led by strong performance in the research divisions, discovery services and the dedicated centers.

“We continue to see good demand in the main client markets of US and Europe, which combined with strong execution and forward planning, has helped us deliver solid revenue growth in the third quarter," said Jonathan Hunt, the managing director and chief executive Officer, Syngene International Ltd.

As per Hunt, the growth in development services was driven predominantly by repeat orders from existing clients as well as an increase in the number of collaborations with emerging bio-pharma companies.

The company completed the construction of a state-of-the-art, sterile fill-finish facility which successfully cleared inspection by the Central Drugs Standard Control Organization (CDSCO), making it compliant for GMP production from the fourth quarter onwards.

“This facility allows us to offer end-to-end solutions in drug product development and manufacturing for clinical supplies for both small and large molecules," said Hunt

“Our second campus in Hyderabad continue to expand and now plays an increasingly important role in our Discovery Chemistry operations," said Hunt. “We expect the completion of an additional 24,000 sq. ft. of lab space and a new compound management facility in the current quarter," he added

In the manufacturing services, company made good progress on strategic milestones during the quarter.

“The highlight of the quarter was the successful inspection of our biologic’s facilities by the US FDA, EMA and MHRA," said Hunt.

With Good Manufacturing Practice (cGMP) certifications from the regulatory agencies in place, the company is well positioned to fulfil its long-term contract with Zoetis and progress its biologics growth strategy.

In July’22 Syngene had signed a 10- year agreement with leading animal health company, Zoetis, to manufacture the drug substance for Librela® (bedinvetmab). The agreement is worth up to $500 Million to Syngene over 10 years. With the regulatory compliant plants the company can cater to many such orders for Biologics manufacturing.

The company is also likely to see its small molecules manufacturing facilities to be up and running soon. The company is likely to see the regulatory inspections of its small manufacturing facilities during the first half of the calendar, said Hunt.

On successfully completing inspections, the small molecule manufacturing will scale up and start contributing to growth from FY24, as is the case with the biologics manufacturing plants that already have regulatory approvals and will see a full year of contributions from FY24.

These are sound investments for the future and benefits from these investments would continue being seen over the long run.

“We are confident that we are on track to deliver our annual revenue growth guidance of high teens" said Hunt

While the company’s revenue growth of 23% Year, it was also aided by Forex tailwinds with rupee depreciating the strengthening of the dollar. The company’s reported earnings before interest tax depreciation and amortization (Ebitda) at 248 Crore also grew 15% year on year. The Ebitda margins came at a healthy 30.9%. Company had guided for 30% Ebitda margins for FY23 and first nine months margins are at 29.7%.

Analysts at Yes Securities said that the margin at 31% were in line with expectation and better than Q2 on back of revenue traction sequentially. The Net profit rose 5% and included forex loss of Rs15.6 Crore which, analysts attributed to the higher than hedged rate of revenue booking leading to corresponding hedge loss versus spot rate. The Revenue for the quarter was hedged at Rs79 rupees to the dollar while average realized rate was upward of 81 rupees per dollar in the third quarter. Thus the dollar strengthening that helped drive revenues however commensurate benefits could not accrue on the profits as because company booked hedge losses.

ABOUT THE AUTHOR

Ujjval Jauhari

Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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