Syngene reports second quarter results

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Revenue from operations up 17% to Rs. 6,102 Mn,

PAT increased 9% to Rs. 920 Mn

Mumbai, October 20, 2021, Syngene International Limited today announced its second quarter results for FY22. The Company reported quarterly revenue from operations growth of 17% year-on-year to Rs. 6,102 Mn; profit after tax for the quarter, before the exceptional item, increased by 9% year-on-year to Rs. 920 Mn. 

Commenting on the results, Jonathan Hunt, Managing Director and Chief Executive Officer, Syngene International Limited, said, “The second quarter was characterized by positive performances in all divisions. In Discovery Services, we saw excellent client demand, particularly within the emerging biopharma segment, as well as further expansion of our relationships with existing clients and our long-term partners in the dedicated research centers.

During the quarter, we continued to manufacture remdesivir for COVID-19, under a voluntary licensing agreement from Gilead.

The quarter also saw continued investment in new technologies and the successful implementation of several digitization and automation projects across our operations. These investments play an important role in enhancing productivity, reducing the impact of human error and improving quality systems across our business.

We are pleased to have delivered a strong performance in the first half of the year. Careful management of costs, coupled with a robust business continuity plan, enabled us to continue to build capability and capacity to meet the growing requirements of our clients.

Notwithstanding the continuing uncertainty of the pandemic, we believe that we are well-positioned to deliver our guidance of mid-teens revenue growth for the full year.”

Quarterly Financial Highlights (All numbers are in Indian rupees in Million except margins)

 Q2 FY22Q2 FY21YoY Change (%)
Revenue from Operations 6,1025,19617%
Revenue6,2315,33417%
EBITDA1,9031,69512%
EBITDA margin (%)3132 
PAT before exceptional item9208419%
PAT Margin (%)1516 
PAT after exceptional item667841(21%)

H1 FY22 Financial Highlights (All numbers are in Indian rupees in Million except margins)

    H1 FY22                        H1 FY21                 YoY Change (%)

Revenue12,0479,41228%
Revenue from operations12,2999,70327%
EBITDA3,6763,09319%
EBITDA Margin (%)3032 
PAT before exceptional item1,6931,42119%
PAT Margin (%)1415 
PAT after exceptional item1,4401,4211%

 During the quarter, the Company has taken an exceptional downward adjustment of Rs. 253 million (net of tax) on account of the Government’s recent decision in the quarter to cap the Services Export Incentive Scheme (SEIS) for research and development services at Rs. 50 million for the Financial Year 2020.  From the financial year 2016 to 2019 the Company benefited from the SEIS incentive at a rate of 5% on net foreign exchange earned. Following this precedence, the Company assumed a similar SEIS incentive would be available in Financial Year 2020 and included this in the financial results for that year.  With capping of incentives at Rs 50 million, the Company has reversed the differential SEIS claim receivables. This has been presented under exceptional items in the financial results for the quarter and half year ended 30 September 2021. In the absence of notification of continuation of SEIS, the company has not accrued any such incentives from FY21 onwards. Hence, the SEIS incentive reversal during the quarter for FY2020 is not indicative of the underlying performance of the business.

Business updates

The second quarter results reflect positive performances from all divisions. In Discovery Services, there was positive demand for newer services like Protein Degradation Technology (PROTACS) and peptide synthesis, complemented by key client markets in the US and Europe beginning the process of returning to normal operations. 

Development Services also experienced a positive uptick in enquiries as clients restarted activities following a lull during the pandemic due to the impact of the virus on trial viability.

In biologics manufacturing, against a backdrop of the expansion of microbial manufacturing and capacity building in mammalian manufacturing, the Company also saw its client base expand during the quarter. Manufacturing of small molecules at Mangalore remains on track to achieve USFDA approval within two years.

Key appointments

As previously announced, Alex Del Priore joined the company in July and is a member of the Executive Committee. Alex will provide strategic direction for growth of the manufacturing services business, leveraging the Company’s discovery and development strengths to build an effective end-to-end offering. He is responsible for the growth of the API business from the new facility in Mangalore as well as the development of the Biologics operations.

Dr Alan Collis also joined in July as the leader of the SynVent team. SynVent is the Company’s platform for integrated discovery and early development which delivers strategies built in collaboration with clients to advance novel molecules into clinical trials.

In September, Dr Sridevi Khambhampaty joined the Manufacturing Services organization to lead the Biopharmaceutical Development team. Sridevi will oversee the development operations for various projects including mAbs, recombinant proteins and therapeutic virus vaccines, from early phase to commercialization. She will also drive the novel drug delivery systems of next-generation biologics.

Earnings call

Syngene will host an investor call at 2.30 pm IST on October 21, 2021 where the senior management will discuss the Company’s performance and answer questions from participants. Please dial the numbers provided below ten minutes ahead of the scheduled start time to participate in this conference call. The dial-in number for this call is +91 22 6280 1279/ +91 22 7115 8180. Other toll numbers are listed in the conference call invitation which is posted on the Company website www.syngeneintl.com. The operator will provide instructions on asking questions before the start of the call. A replay of this call will also be available until July 28, 2021 on +91 22 71945757/ +91 22 66635757, Playback ID:  63039. We will aim to post the transcript of the conference call on the Company website within seven working days of the investor conference call.

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