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Informist, Thursday, Jul 25, 2024

 

By Alina Geogy

 

MUMBAI - Syngene International Ltd reported a fall in earnings for the June quarter as the steady growth in biologics manufacturing and dedicated centres segments was not enough to offset the weakness in the company's overall discovery services vertical. A weak funding backdrop for US-based biotechnology companies has been hurting Syngene's discovery services segment for more than two years now, but the company has alluded to early signs of recovery in the subdued funding environment.

 

The company's consolidated net profit for Apr-Jun fell 19% on year to 757 mln rupees while consolidated revenue from operations declined 2.3% to 7.90 bln rupees. Sequentially, the net profit fell about 60% and revenue fell nearly 14%.

 

The Bengaluru-based company's earnings before interest, taxes, depreciation, and amortisation fell 20% on year to 1.88 bln rupees. The EBITDA margin also fell to 23.3% in Apr-Jun from 28.3% in the year-ago period.

 

The value of US biotech funding has seen a marked improvement in the first half of 2024, Jonathan Hunt, managing director and chief executive officer, said in a post-earnings press release. "It will take a while for this funding to flow through into outsourcing activities and Syngene is in a strong position to capture a significant share of the upturn in biotech spending in the months ahead," he said.

 

Thus, the company is on track to achieve its guidance range for the current financial year with "momentum expected to build in the second half of the year", Sibaji Biswas, executive director and chief financial officer, said in the post-earnings release. At the time of detailing earnings for the March quarter, Syngene had guided for revenue growth of high single digit to low double digits for 2024-25 (Apr-Mar), on hopes of some recovery in demand from the US biotech industry in the second half of the year.

 

The company is also benefitting from opportunities arising out of global pharmaceutical clients exploring outsourcing options beyond China. During the June quarter, the company continued to attract repeat business from existing clients. 

 

Syngene accrued a one-time gain of 320 mln rupees during the June quarter, which the company received as a final claim from its insurance company for the loss of fixed assets in a fire incident in 2016. The company's other income fell over 23% on year to 181 mln rupees.

During Apr-Jun, the company's total expenses, including finance costs, were 7.39 bln rupees, higher than 7.09 bln rupees a year ago. Finance costs rose to 117 mln rupees from 105 mln rupees a year ago. The company's tax expenses for Apr-Jun were 256 mln rupees, down over 13% from the year-ago period.

 

The repurposing of the biologics manufacturing facility acquired in 2023 from Stelis Biopharma Ltd remains on schedule, the company said. The completion of the qualification and facility modifications is expected in the second half of 2024-25, the company said. Once operational, the facility will triple the company's biologics manufacturing capacity and add a high-speed, high-volume fill-finish line, it said. Last year, Syngene International had acquired the unit-3 biologics manufacturing facility in Bengaluru from Stelis Biopharma.

Syngene International, a subsidiary of Biocon Ltd, was established in 1993 as the country's first contract research organisation. The company is involved in the business of discovery of drugs and novel molecules, contract development, and contract manufacturing services.

 

At 1350 IST, shares of Syngene were trading 3.5% higher at 772 rupees on the National Stock Exchange. The stock has risen over 8% so far this month and 12% in six months.  End

 

Edited by Vandana Hingorani

 

 

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