Is Syngene International the Infosys of Indian Pharma?

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The fun fact about the above mentioned quote is that if you replace “Medicine” with “Investing” you will also find most of the people nodding in agreement.

Interestingly, we are going to find a Stock worth investing in Medicine: Syngene International. Synegene International has been in news for good reasons recently. Some of them are below:

 Remdesivir the most widely used drug to treat Covid patients currently

We are going to analyse the Syngene International Stock from a Long term Investment point of view. So let us get down to the background of the Company.

Overview of Syngene International

Syngene International Limited was incorporated in 1993 as a subsidiary of Biocon. It is India’s leading Contract Research Organisation (CRO) and it primarily supports R&D programmes of global innovative companies .

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syngene international
Brief snapshot of capabilities

Business Model

As a CRO, Syngene get involved in Discovery & Development stage. Let us understand various engagement models in CRO

How CRO Makes Money?

There are 3 revenue/engagement models in CRO industry:

Syngene Operates with FTE & FFS only

What CDMO has to do with Medicine Life cycle?

CDMO role is in Development and Commercialisation stage

As per Kotak Report, 50 to 60% of the small molecule manufacturing is outsourced to CDMO players.

Small Molecule Manufacturing :Outsourcing vs In-house
Study for year 2017

Small Pharma/biotech they largely depend on CDMO for manufacturing (2017:80% of newly approved drugs)

Big Pharma generally outsource small molecule as the process is validated and low surprises expected while being outsourced.( 2017: 20% of newly approved drugs).Big Pharma keeps dual sources for API so for large drugs they make API inhouse and  keep second source as CDMO.

Syngene International: Business Segments

Revenue Break Up:

Discovery Science: 32%

Development & Manufacturing:37%

Dedicated Canters:31%

Financial Analysis

All good
All well
Increasing over the period
The Profit generated is real as CFO/EBITDA is over 0.8 for past 4 years

The New Growth Frontier: Biologics

• The global pharmaceutical industry is facing a shift from chemical-based drugs to biologics and biosimilars. While small molecule therapeutics had previously dominated research and captured major market share, the advent of large molecule therapeutics (biologics and biosimilars) has rapidly transformed the pharmaceutical industry.

• Given their targeted mechanism of action and reduced toxicity, biologics have gained major market share in terms of both revenue and total market,

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Syngene Stated Strategy is to to be a leading Biologics CRAM player

Reason: High Switching Cost so a stable business model and gives a valuation kicker (has been the case with following CRAMs focussing on biologics:


Is Syngene International the Infosys of Pharma?

CRO/CRAM all are different types of Outsourcing and Indian companies always have an edge due to abundant access to low technology workers. In case IT outsourcing the knowledge workers were Engineers which benefitted stocks like Infosys to become a wealth creator.

If we draw a parallel of IT outsourcing with Contract Research outsourcing then due to ample supply of Biotech graduates/PHD holders Indian CRAM players like Syngene International shall have an edge.

To know more Watch a detailed video here:

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Amitabh Vatsya

Amitabh Vatsya

Amitabh Vatsya is an active Investment Vlogger ( | Loves to share his ideas at | Follow him @amitabhvatsya
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