Syngene to benefit from rupee depreciation, rising demand for research & manufacturing services: CEO Jonathan Hunt

Syngene International, the listed contract research and manufacturing arm of Biocon, sees its revenues going up in FY23 on account of rupee depreciation and a healthy demand environment for outsourcing of drug discovery, early development services and manufacturing.
Syngene has raised the revenue guidance for FY23 from mid-teens to high teens due to significant depreciation of rupee against the dollar and signing up new contracts. Rupee depreciated almost 5% since April 1 against the dollar.

Excluding covid-linked Remdesivir sales in the previous year, Syngene revenues has grown at a healthy 30% year-on-year (YoY) to Rs 660 crore in Q1FY23. The company won a 10-year agreement worth up to $500 million with world's largest animal health company, Zoetis, for commercial manufacturing of Librela, a first-of-its-kind injectable monoclonal antibody used for the alleviation of pain associated with osteoarthritis in dogs.

"The norm in life sciences throughout the world is that client contracts are dollar denominated. We get a natural boost of our revenues, we bring those dollars back to India," Jonathan Hunt, CEO and MD of Syngene, told ET in a recent interview.
Hunt said the existing rupee/dollar exchange rate will widen the cost arbitrage advantage for outsourcing research and manufacturing services to India. He said it isn't just the strong dollar, but more outsourcing is chasing India, due to normalisation of R&D and manufacturing activities.

"We are seeing good demand in the marketplace around the world. As our clients, who are predominantly from the West, are getting back to work and trying to catch up with the lost ground due to the pandemic," Hunt said.

Hunt added that Syngene has moved from modest scale manufacturer supporting clinical trial batches to commercial scale manufacturing and the Zoetis deal was the first step in that direction, which is expected to pave the way for more such deals.
"We are constantly looking to invest in the business, we have a capex investment programme of $100 million this year, about half of that is going into the research side, and a third is going into biologics manufacturing and the remainder is spread across the business," Hunt said.

The global market for contract research was valued at USD 48.55 billion in 2020 and is expected to reach USD 83.34 billion growing at a CAGR of 9.4%. Within this, the outsourcing market for drug discovery and early development services is expected to grow at a CAGR of 6.4% over 2020-2026 to reach a value of USD 44 billion by the end of this period, according to market research firm Frost & Sullivan.