Thank you, [Alwack?] .

Good morning and warm welcome to all the participants on Anthem Biosciences 4Q and FY26 earnings call hosted by JM Financial. Today on this call, we have with us from the management, Mr.

Ajay Bhardwaj, Managing Director and Chief Executive Officer, and Mr. Gawir Baig, Chief Financial Officer.

I will now hand over the call to the Mr. Ajay Bhardwaj for his opening remarks.

Thank you and over to you, sir.

Thank you, Amey. Thank you everyone for being on this call.

Good morning. At the outset, I'm very pleased to say we ended the financial year 2025-26 on a very strong note.

Our consolidated revenue from operations for the full year was ₹2,124 crore. Out of this, our CRDMO business contributed 83% of our of this revenue, delivering ₹1,773 crore, which was an 18% growth over last year.

Specialty ingredients contributed 17% of our revenue, and that delivered ₹352 crore worth of sales. We delivered ₹156 crore other income for the financial year, taking our total revenue to ₹2,280 crore, which was a growth of 18% over last year.

Other operating income includes gain on account of Forex and RoDTEP export incentives of ₹63 crore and financial and other non-operating income of ₹92 crore. Our EBITDA was just shy of ₹1,000 crore at ₹990 crore, which included other income, with EBITDA margins of 43.4%, a growth of 31% on absolute terms and 420 basis points on margins over the last financial year.

PBT before exceptional items were was ₹849 crore. A word about the new labor code impact and tax expense, our profit after tax for the year was ₹592 crore, a growth of 31% over last year with PAT margins of 26%.

Net cash position of as of March 31st, 2026, is ₹1,375 crore. With respect to the quarterly financials, this was our highest revenue quarter ever, which was that is in Q4 FY26.

We delivered a revenue growth year-on-year of 26% for the quarter with consolidated revenues at ₹611 crore. The CRDMO business delivered ₹513 crore revenues with a growth of 31% year on on on an year-on-year basis.

Specialty ingredients delivered ₹98 crore, a growth of 8% year on YoY. EBITDA including other incomes was ₹318 crore, a growth of 52% over last year with EBITDA margins at 48% 48.1% to be precise.

PBT before exceptional items was 2,700 200 ₹277 crore. We reassessed the impact of the new labor code changes factoring in the revised remuneration structure.

As a result, we have recognized a credit of ₹98 lakh as exceptional items on account of the new low labor code implementation. PAT was 9 ₹190 crore for the quarter with PAT margins at 28.7%, a growth of 130% on a YoY basis.

Overall, in a nutshell, it was a strong performance for the financial year 2025-26 with our highest revenue quarter ever in Q4 FY26. Anthem's commitment to prudent cost management and focus on long-term value creation has enabled us to expand profitability margins while delivering this revenue growth.

Our EBITDA and PAT for the year grew by more than 30% in line with our 30% in line with our growth aspirations. We continue to maintain a healthy financial position and remain committed to delivering sustainable growth across all business segments.

As we step into this financial year of 2026-27, our priorities remain clear: to build one of the most agile, science-led, and future-ready future-ready CRDMO platforms in the world. Thank you for your attention.

Amey, I'll I now open the floor for any questions and comments.

Hi. Thanks for taking my question and congrats on good finish to the year.

As we step in fiscal '27, how should we think about the growth for CRDMO business both for research and development and manufacturing, both these pieces? Also, if you could comment on, for our key products where we had witnessed some destocking impact in fiscal '26, are those largely sorted now?

Should we see growth coming back on those molecules as we move ahead?

Yeah. Thanks, Bansi.

Just an overall comment. We, when we look at the future, we if you look at our history as well, if you look at our track record, we've all we've delivered growth in the vicinity of 20% and more, and that's what we aspire to, even in the coming years.

It is for us we believe that we're in a good place to align with what we've done in the past, but of course, that remains to be seen. We are very confident of our growth trajectory in this year and the years to come.

On the question of destocking, that part that portion you there was definitely that with our customers from many of our customers, but you have seen that in spite of that, we have delivered such good growth. Going forward, when things get better and when this this situation of destocking now swings to restocking, I think Anthem would be even in even in a better place.

Again, I think mostly it's behind us, and we expect that this would be this will have a very positive impact on Anthem's top line and bottom line.

Bansi, I just want to add something over here. Historically, if you look at it last 10 years, our revenue growth has been around 20% level.

Even when we started last year, we said that we'll be delivering about 20%, but then we course-corrected and then we delivered about 15% revenue growth. While we had said 20% on revenues and 20% on EBITDA and PAT, whatever was the shortfall on revenues, we more than made up with respect to our EBITDA and PAT performance with a 30% EBITDA growth and 30% plus PAT growth for FY25-26.

Our aspirations are quite high. What we have delivered in the past historically over a long-term period, and we are not talking about a near-term FY27 or a near-term two years, one year or a two-year kind of a period.

We want to refrain from giving any guidance for FY27 or FY28, but long term, have we put in the ingredients from a growth point of view? I would say the answer is yes.

We are investing in people, we're investing in our facilities, we are investing in technology, and all of this is also seen by our customers. Customers do like us, we are getting more and more projects as well.

Our commercial portfolio has increased, our other portfolio from a late stage point of view has also gone up. All the ingredients are there.

I would refrain from giving a forward-looking FY27 or a near-term guidance, but our thought process is to deliver on what we have delivered in the past across all parameters. Last year we missed out on one parameter, but more than compensated on the two parameters on EBITDA and PAT, but we will continue to do our best to deliver going forward across all parameters from a growth and profitability point of view.

No,

thanks, and appreciate that. My second question is, also in terms of how do we, from here on, intend to augment our relationship with more innovators?

I know we've got very strong relationship with probably three of the top 20 Big Pharma, we've added probably two more there. As we move along, what probably the initiatives that you've been taking, so that we see broadening of our footprint with more innovators, large innovators?

Secondly, on capacities, do you think this is constrained by our capacity and therefore as we move along over the next two years when more capacity comes online, we should see broadening of our relationship with more Big Pharmas?

It is already, as you rightly said, and there have been two notable additions last year in Big Pharma, which we didn't have earlier. These were done directly.

Okay? A lot of our relationships with Big Pharma have come through acquisitions of the biotechs that we've been working with, and when they get acquired, as I've said, we move into working with Big Pharma.

Then once we're in there, we try to broaden our relationship in other parts of their business. However, now last year we've had two direct contacts and two two direct relationships, which are now, I'm glad to say, growing healthily.

See, it's not like flipping a switch. Your customers will have to build confidence in you, and they will slowly start giving you more and more exposure to their business, a larger contracts.

I think we've already done that, the initial part, and we expect that we will see a bigger part of their pie in the years ahead. That's one.

Secondly, a lot of our new programs are we have at this moment about 10 programs in the phase three in small biotechs, and historically they always get acquired. Once they get acquired by Big Pharma, we expect that our relationship will now be with new Big Pharmas.

I think we're in a good place. We are about 100 projects are in more than 100 projects we're doing in R&D in early stages, and 10 of them are in phase three.

We are in a good place, I think, to add more Big Pharma customers to our portfolio.

The point which you had asked on capacity, see with the capacity additions that we have made in the last financial year with respect to Unit 2 expansion and also Unit 3 commissioning, we have a decent headroom right now which we can use up till that time our Unit 4 comes up both on chemistry and biology. Capacity will not be a constraint.

Unit 2 expansion that we made that added significant capacity. We moved up from 270 kL in Unit 246 kL in Unit 2 to almost about 400 376 kL in Unit 2, it's a 50% addition.

Unit 3 is also fully up and running right now. Capacity will not be a constraint.

What we are doing in Unit 4 is more to make ourselves future-ready so that whenever the capacity comes up for Unit 4 and there are more programs coming in from early stage biotech innovators or from Big Pharma, we have the wherewithal to be able to service them. Capacity is not a constraint for us now.

All right. Thank you.

Thank you for taking my question, sir. Sir, one question, you mentioned about you're trying to make the business more agile, future-ready CRDMO platform.

In that context, what are the big missing pieces that you would like to address let's say over the next two, three years, either organically or even inorganic is part of your plan, whether in India or even outside India, given the current geopolitical situation and your expanding customer relationships?

Thanks, Saion. Again, in terms of becoming more agile and more ready science-led and be ready for our customers, what Anthem is doing is investing in technology.

We though we do have, if you were look if you were look at our factories, we do have traditional bioreactors and bioreactors, but at the same time, we are also investing heavily in changing the way chemistry is done. We are looking at and also biology.

Can we do this in a continuous fashion? Can we change it to using, bringing better automation and control?

Can we also do, more green chemistry? All of this at a commercial scale.

Where we have the advantage is that when we look at a program, we we look at it very early in the in its in its in its evolution, and so when it's an early program comes in, you can implement all these so that when it's it goes for a regulatory when it goes through the regulators, you've already implemented these new technologies. That makes us in a gives puts us in a place where we have, obviously, the respect of the customer, but also the regulators love better control, better more green chemistry, and at the same time, delivering higher quality as a result of all these better controls.

The the the emphasis on technology will remain, and it is this is not just limited to what we've to we've already told everybody, we are adding new aspects to this technology, and as and when you, visit Anthem, you'll be able to see those in action. This is the first part.

Secondly, in terms of acquisitions and growth, apart from our organic growth, which is which is also substantive, we are not averse to looking at acquisitions, both in India and abroad. We are we are actively searching.

Unfortunately, we haven't come come across a right candidate, and and I've said this ad nauseam and I'll repeat it again, we will not do an acquisition for the sake of sake of an acquisition. It has to make sense, and it has to be the right asset.

We're we're always scouting for such targets, but once they come along, only then, and the right one there, we'll make that call. This is to answer, we will drive our business through technology.

Understood. Just one more question on CapEx.

If you can talk about your CapEx number for next year as you're expanding the new unit and also slightly medium term CapEx outlook, let's say over the next three, four years, if you can guide for that.

Sure. Saion, in terms of our CapEx plan, the first and the major CapEx what we are incurring right now is on Unit 4.

Unit 4 we have articulated that this is going to be our largest project. Unit 1, 2, and 3 put together Unit 4 is going to be much larger than all of the units put together, it's a 30-acre piece of land and all our Unit 1, 2, and 3 put together is close to about 30 acres.

In phase one of that expansion, we are looking at adding and we are looking at investing almost about ₹1,200-odd crore across two years, this year FY27 and in FY28. We aim to complete the phase one expansion by March 28 financial year, towards the later half of March '28.

This will add close to about 365 kL of custom synthesis capacity and 100 kL of fermentation. Vis-a-vis our current capacity is 425 kL custom synthesis and 180 kL fermentation.

We are more or less doubling on custom synthesis and adding 50% more on the fermentation side. That's on Unit 4.

We'll be completing a few expansion, which is ongoing, more on Unit 2 and Unit 3, which is lying as CWIP in our books in this half year of FY27. Largely medium term, if you look at it, it's going to be Unit 4, which is going to be driving the major part of it.

Just to add, we still have two more phases to be done with respect to Unit 4. That we will take it up once phase one gets completed and that will be post March '28, but the aspirations are huge over there so that we can build a much larger facility which will, in phase one, at least double, in phase two, it could be triple of our overall size from an overall capacity size point of view.

Understood. Just for clarification, next year your CapEx would be north of ₹600 crore, right?

Yes.

Would that be a right assessment?

Can you

600 plus from residual CapEx plus maintenance CapEx. What would be the number we should work with next year?

Roughly about 700 and then post that will be about 500.

Understood. Thank you.

This we are investing for the future.

Yeah.

Thank you for the opportunity. Am I audible?

Okay. I wanted to get some color on the product side.

As you are saying new orders coming or there may be new SKUs, what modalities are they coming in? Are they biological entities or chemical entities?

Sorry, Debanjan, I didn't catch that question. Can you just repeat the question?

The new orders that you are seeing coming, right, are they coming in the biological entity modalities or chemical entity modalities?

Both. I would say that across both custom synthesis side and biology side, plus on the advanced technologies on the custom synthesis, more on the peptides or on the RNAi side, we're getting more and more orders there.

Okay. Another question, what payload are we developing in the ADC platform?

What type of payload?

Sorry?

What type of payload are we developing in the ADC platform?

I'm not at a liberty to disclose those. Those are confidential work that we do for our clients.

We do a variety of payloads, at least I think 15, 20 payloads we work on and depending on what our clients want. Some of them are proprietary, so that's a very interesting area, and we have a huge amount of activity going on there.

I'm sorry, I won't be able to give the name of the payloads.

Okay. Last question, from the current manufacturing revenue, right, not the early research, how much of it coming from biologics and how much it is coming from chemical entities, current manufacturing revenues?

A larger portion of it is from custom synthesis, but see, Debanjan, a lot of work includes enzymatic work. There is a lot of peptides work which gets done, a lot of work on the RNAi side, even in custom synthesis.

Some of the areas we use biotransformation. It's very difficult to articulate and differentiate saying that this is pure-play biology and this is pure-play custom synthesis, but a sizeable portion of our work comes from the NCE molecule side, on the custom synthesis side.

Thank you. Thank you so much.

Thank you.

Thank you.

Congratulations, sir, for good set of numbers. Sir, my question is any risk of destocking inventory, etc.

in our company? GLP-1 basically, how is the opportunity size for us and overall opportunity size for us in an expected growth rate for next two, three years and differentiator for our company, sir?

Thank you.

To answer the first question, the destocking that had to happen has already happened. This year everything will be in the positive territory.

They're restocking now. That part is behind us.

The second part is on the question of GLP-1, see, if you follow the GLP approvals in India, most of them have their active is from China. Now we are in conversations with I would say all the big players to give them an alternate which is based here in India.

We're in a very good position as far as GLP-1 goes, but this will be after most of them have launched, and so we will be in a good place to replace imports. That is a position that we've always been strong in.

The third question was on

differentiator for our company and Opportunity size and expected growth rate for the next few years, sir.

Historically we've grown upwards of 20%, and we feel confident that this is what we want to maintain. However, as I say, we don't give forward-looking guidance, I would not be able to give a number, but we do aspire to the growth that we have maintained so far, and everything, as far as Anthem is concerned, is aligned to give you that growth rate.

In terms of what differentiates us, I think it starts at the very, very basic thing. We are very different from our peers in India.

We are more focused on small biotechs, and therefore, we are more on the discovery side rather than the full-time equivalent type of business. What we differentiate ourselves is by technology, as well.

I think in that, we have no peers in the country. We absolutely approach every problem from a new technology solutions and which our clients love.

I think that gives us a lot of visibility and traction with our clients. The third part that differentiates is our culture.

Hello, is the line still active?

Please.

Yeah. A very large number of our employees are on our ESOP plan, 40% at the time of announcing stock options.

We have a very young, energized workforce which wants to see the company grow, and I think are really making that difference.

Yeah. Sir, any risk of AI in the discovery stage where we are focused?

See, AI is coming into all kinds of function of the company. It starts with the recruitment, with HR, with warehousing.

There's a lot of hype of AI, but you have to pick up the use cases and implement them case by case as they are relevant to you. It's not some overarching thing that you can say, "I have now put the company on AI."

It has to be in the areas where it is relevant. It's a work in progress.

We are constantly exploring that.

Thank you, sir.

Very good morning. Am I audible?

Very.

Thanks a lot for the opportunity, and apologies in advance if my questions are very basic. I'm very new to the company.

I wanted to understand firstly on the peptide front, a listed peer claims to have also developed the capability of making the full peptide chain right from fragments to the APIs, and they have even started expanding their capacity for the same. How do you see this development and what would be your strategy to differentiate against the competition domestic and international?

This is not a science lesson, but when you say peptide, peptide is like saying an organic molecule. There are very different type of peptides, and it's a full body of chemistry by themselves.

There is many ways to make depending on the peptide that is of interest. You can make different fragments, then do convergent synthesis, or you can do even serially by step-by-step, or you can do partly by fermentation and partly by synthesis and then do what's called biosynthesis.

There are all kinds of ways of doing it. Depending on the peptide in question, we have seven or eight or may even more than that, 10, 12 peptides which we are working on.

Each of them follow a different strategy. It depends on the structure and the way it has to be built.

I won't have an answer which is to give you a very generic answer, how are we doing this, when we look at a problem, we look at what is the most optimal solution in terms of economics. We approach the problem from that side, which therefore our aim is always to get the best cost of goods.

As to your other question that somebody is doing all this in assembly of a peptide right from beginning, is Anthem. I'm not privy to what they are doing, but Anthem is in a very, very good place as far as GLP-1 type of peptides are concerned.

I believe that we have extremely competitive cost of goods, rivaling even the Chinese, I think we're in a good place there. We're very competitive.

Great. Thanks a lot for that answer.

Next was also just stepping back in terms of molecules and complexities, would it be the correct understanding that the TAM of peptide is larger than that of oligonucleotides? Also just wanted to confirm if between say peptide, oligonucleotides, and ADCs, how would you rank for yourself on the basis of the complexity of the subject that you work with, your capability of course, and the TAM of these areas, and competition if you can explore these areas of these three molecules and modalities?

All right. You're asking very fundamental question.

Right now peptides are the most successful commercial molecule, there's in terms of TAM, they would be the biggest, but for the some some application, peptides don't work, there you need an ADC, and that's a very big area of growth in the in the pharma pharma industry. Then again, when you bring oligonucleotides, they are everywhere again.

Anthem has capability to do work in all these areas and that's is something which is because these are the new modalities and these are new areas of research, and as I said, Anthem addresses all its addresses all the problems through, find solutions technological solutions, we are present in these three modalities in a very strong way. It'd be it'd be unfair to compare ADC versus peptides versus oligo.

They all do specific jobs and they are designed for that. The idea is to, get to the patients the right treatment, Anthem is present in all of them.

As far as market is concerned, given the very large nature of diabetes as well as obesity, right now peptides are the largest sales in, and and and in the foreseeable future, that's what it looks like.

Great. Thanks a lot for your answers and all the very best.

Thank you.

Thank you.

Hi, thanks for taking my question. I wanted to understand what steps are we taking to build a pipeline even in large molecules and wanted to delve deeper into the BD side of large molecule.

How willing are innovators to give their projects to Indian CRDMO? How easy or difficult is it to bring those early stage molecules in the country versus let's say, the willingness in small molecules?

Does India have any cost benefit advantage versus a Korea or China? Because CRDMO from those region claim that in large molecules there's no cost difference, their yields are extremely high.

Just wanted to get thoughts around the large molecule CRDMO space. That's my first question.

Okay. Thanks, Dhawal.

See, Anthem is, as I said, we're focused equally and not all our peers in India, at least are. We have focused very well on biology as well as chemistry, we're making investments to in this space as well so that we can do large molecule manufacture.

We are working with about four, five projects where we would be the development partner and hopefully then the manufacturing partner in large molecules. To answer your question about how willing they are, they have no problem.

Most of the customers we work with, and they don't see a problem of coming to India. The problem, if there is any, lies in the capacities.

The Koreans, in particular, and China also, the large companies have built up massive capacities, in that sense, they are ahead of us. There's no denying that.

Because the upfront investment in large molecules is quite large, you have to be willing to invest billions of dollars for those kind of capacities, which some of the players in Korea and China have done that. Second part, what is Anthem doing to get people on board?

Again, we plug away at this because I think in terms of early development, Anthem is a very, very good partner, and if you have early development, at least in biologics, the chances are that you can retain the project because you would know more about it than anybody else, and they would not like to transfer out when all the regulatory work has also been done at Anthem. Our strategy is a little different, it has to be.

We can't go in there like Celltrion or Samsung and say, "Give us a project," or even Lonza, ready-made project because they have the capacities to support it. All the Indian companies are in the same position.

Biosimilars, India is already making a dent, in novel molecules also, it is in the same position that we were in small molecules, let's say 20, 25 years ago in NCEs, and I think it's a very good place because now the mental barriers of giving work to India are not there, the more we invest, which we are, the more we will see projects coming our way.

Got it, sir. This is very helpful commentary.

Secondly, just wanted to get the update on the biosimilar asset that we are working on. How's the progress going on?

Eventually, when things will hit our P&L, will put it under the CRDMO category or will it fall under the specialty ingredients?

That's going really well. That project is well on its way, and I think, as there's a process of doing this.

It has to be refiled, three batches, all that is going on now. Typically the lead times in approval of another site tends to be one year or so.

I think it will hit our P&L next year. Where will we classify it?

I think it will go in CRDMO.

CRDMO.

It will go in CRDMO.

Thank you, sir. I have more question, I'll join back the queue.

Thanks, Dhawal.

Thanks for the opportunity. Sir, if you could also talk about specialty ingredient, what is the kind of order book that we are dealing with right now, is this segment currently a victim of destocking as we can see in the revenue growth numbers?

Ashish, with respect to specialty ingredients, the nature of the business is slightly different. We are dealing with products like Serratiopeptidase.

Hi, can you hear me? There's a little bit of a background noise.

We are dealing with products like Serratiopeptidase, Vitamin K2-7, probiotics, enzymes, all of these products which we are dealing and that is more catered towards the India and ROW markets. We are also looking at getting this products filed for some of the developed markets, as well.

These are products our own products where we are selling to multiple customers, it's slightly different than the CRDMO business where we are working with the innovators one-on-one and where there is dedicated manufacturing which we do for some of the customers and we get order book from them, and there's a significant large lead time in terms of supplying those molecules. Hence, you have order book right at the very beginning of the year for six months down the line.

Specialty ingredients has been a flow business for us. If you look at specialty ingredients, I just want to add over there, last year towards the first three quarters of the year was a little bit flat for us, but we have started increasing revenues in specialty ingredients from the fourth quarter onwards.

We delivered about 8% growth on the fourth quarter, and we would aspire to grow that business also in a similar growth trajectory as what we are looking at growing for our CRDMO business, in overall on a 20% sort of a for specialty ingredients as well. We don't have a order book sort of a concept in specialty ingredients because we manufacture and then we try to sell to the customers who are already taking the products across multiple geographies and across multiple product categories.

We are very confident now we are also adding in our Unit 4 a dedicated food facility, this something which has been lacking. What has been happening is one reason why the growth tends to be a little patchy there is that when we have the same facilities for specialty ingredients and our CRDMO business NCE business, sometimes when we get new projects in that area for CRDMO, we tend to give less importance to the specialty ingredients business, some of their capacities get cannibalized by our CRDMO business.

That's one reason why they're not able to really see the growth, but now we're investing in a separate facility and that will help us a lot in the future.

Yeah. Given that some part of the gross block is actually fungible, how do you maintain margins then?

Is there an aspiration because we have spoken about the revenue as growth aspiration? Anything on the EBITDA margin side you would like to comment on?

Our aspiration is across all the parameters, whether it is revenue, EBITDA, or PAT, is the same. See, if we continue to grow our business in a particular growth rate, our costs are also escalating in a similar sort of a growth rate.

With a little bit of an operating leverage, we'll be able to keep our margins constant and continue to witness a similar growth trajectory in EBITDA, as well as on a PAT as well as on a PAT terms.

So 38%, 40% EBITDA margin is a fair number to assume?

We've delivered so far and we'll continue to deliver those numbers going forward, as well.

Okay. Lastly, on headwind side for at least for our business, you do not see any risk emanating from the tariff situation, right?

No, no. Tariffs is not a problem because most of the Big Pharma that we work with already have separate deals with the administration in the US.

The second part is these are very difficult times to predict what will happen as terms of headwinds. Nobody anticipated a war in the Middle East.

There's so many things which are up in the air. In spite of that, Anthem has grown and grown really well, and I don't see why we couldn't do that.

These are times where there are inflationary pressures. We all know that, we can see it.

At the same time, we also know that what will deliver the goods is our technology platforms and we believe that we'll be able to maintain both growth and profitability.

That's very helpful. Thanks, and all the best.

Thank you. Thank you.

Thank you for the follow-up. Sir, just one question.

Anthem today is still a very small company compared to many global peers and you have sort of a very cohesive unit, high quality service, which also reflected in steady growth and also very high profit margins and profitability. Now, if we look forward over the next four, five years, even if you grow at 20%, maybe your scale will double or maybe triple, and if you add inorganic, it could sort of become even larger.

Your comments do suggest that we are at an inflection point where CRDMO in India is accepted. Also Anthem as a company is gaining traction with Big Pharma.

The opportunities can come your way at a much faster pace and that would require you to sort of grow much bigger than let's say or much faster than what you have grown in the past. That would also sort of probably present some challenges on execution and profitability.

Have you envisioned Anthem from a five, seven-year perspective, slightly longer term, kind of aspiration you have and these levels of profitability, can it sustain? Because this is already very high compared to anyone else in the industry.

Yeah. We have envisioned five to seven years of growth.

As we said, we're investing such a large amount in Unit 4. By the time that gets in and gets filled up, the capacity of Unit 4 is going to be greater than all our units put together.

Yes, there are much bigger players out there, but we've also had the fastest growth rate among all our peers. We don't see that at the end of the day, it is about your growth rather than worrying about what other sizes, right?

Somebody can have a bigger company, but we are growing faster than most. That's one thing.

Secondly, yes, we are investing in the future, and if we weren't looking at five years five years ahead, why would we be investing such a large amount of money? The third thing about acquisitions and growth in terms of getting into an inorganic growth situation, yes, we are very keen on that, and if we get something which is the right quality and the right geography, we will definitely go for it.

There is no doubt about it that we are looking at all possibilities. Our cash situation allows us to be flexible.

We can look at these possibilities. You're absolutely right, our margins are really, really high.

Just to maintain them would be a yeoman task, but I think we're equal to it and we believe we can maintain them. We really want to grow them as well.

We are better than our peers in terms of our growth, in terms of our margins, and we intend to stay there. Sir.

Thank you. Thank you.

The next question comes from the line of Amey Chalke with JM Financial Services. Please go ahead.

Amey, sir, please go ahead with your question and unmute your line in case if you are on mute. Sure.

Thank you for giving me opportunity. I have first question on CRO, how it has done during the year and the quarter and if we can provide the breakup.

Also along with that, the GMs have gone up over last one year as well as this quarter or the second half, it is consistently above 65%. Is it contributed by the higher CRO mix and what is the outlook on it?

Thank you. Amey, with respect to the gross margins, we had articulated this that for one of the intermediates where we were outsourcing it and we were not completely backward-integrated, we became backward-integrated during the course of last year, and it started showing in the gross margins with respect to the material margin movement.

That integration is complete. We source the raw material, manufacture the intermediates, we manufacture the API and supply to the customer.

We are not reliant on any external source, so that backward integration has helped us in terms of improving our material margins, which has moved up over Q3 and Q4 of last year. Now, in terms of the split of revenues, see, a large portion of our business still comes from commercial molecules.

In the course of last year, we had four molecules which went commercial. Our commercial pipeline increased to 14.

On the late stage side, we had 10 at the beginning of the year. We got four of them moved towards commercial, but we also added a few more molecules in the late stage pipeline, and now the late stage pipeline stands at 10 phase three molecules.

Along with that, we work on 100 plus programs on the early stage side. The development and manufacturing batches, what we supply for some of these early stage, late stage molecules is roughly about 15% of our revenues.

Commercial is about 60%. 14 60% and 14%.

R&D is about 8% to 9% of our business, and the balance is specialty ingredients. Specialty ingredients is about 17% of our business.

That's the breakdown. Sure, sure.

Thank you so much. The one question I have for Ajay, CRO API AI companies are also started coming in the US market.

Although we are fortunately more manufacturing company, but how do you see this AI evolution in the CRDMO space? Do you think that there is any space for this AI coming into the manufacturing side of it, which can be a material advantage on the AI?

Yeah. Amey.

What we hear is that it will be a big aid in discovery, which is identification of molecules given a particular target. It will do it far faster, better.

If we also hear that it will give us many more optimized routes of manufacture. There AI will definitely play a part.

I'm pretty sure of that. At the end of the day, somebody has to get into the plant and manufacture, and that's 83% of our not it's very high percentage of our business.

We feel we're a little protected. Manufacturing still has to be done.

There are areas where you will be able to optimize your plants better with better use of AI. That'll only help us, and that will help us improve our margins, hopefully.

I don't have a clear-cut answer to it, but there'll be portions of your business which will benefit from it, and I think we'll implement it depending on case by case as to where we see the maximum benefit and implement the AI there. Overall, a company which has to be AI-ready.

It's not a catch-all, but it will solve certain problems better than people can, and I think that's something that we are definitely looking.

Sure. Just last question, if I can.

On GLP-1, when is the commercialization is expected on the generic side of it, and can it be a material segment for us going ahead? Thank you so

much. Looking into the future, it'll be a big contributor.

I'm pretty sure of it. At the same time, all our customers are working on their new formulation with our material, it also depends on when they can get approval and when we can get approval to launch it.

I think it's just sitting there, otherwise we're in a good place. That could happen in 6 months, it could happen in 8 months, but I think we are there.

Sure, sir. Thank you so much.

I will join back.

Thank you.

Thanks for the follow-up. I just wanted some more color on the phase three molecule pipeline that we have, two parts to it.

On the first part, the recently added four molecules, how many are lateral entry for us versus molecules coming from phase two and graduating to phase three? Secondly, can you divide this entire basket of 10 molecules into how many are Big Pharma versus biotech as of now, and what would be the modalities of this entire basket of 10 molecules?

Dhawal, in terms of the additions which has happened in phase three, all of them are non-lateral. These are molecules where we were working with them on early phase, phase two, and they have moved to phase three.

Okay. All of them are emerging biotech.

It has come from our entire the biotech funnel where we work right from discovery, development, supplying them the small quantities, and then as their quantities progress, and as the product moves from phase one to phase two, they have moved to phase three. It's a good mix of molecules which are on ADC side.

It's a good mix of molecules. We have some molecules where we also do biotransformation and that has also moved on phase three.

I won't say that it's more dominated towards one particular therapeutic category or one particular technology category. It's a good mix across all the spectrum of ADC, peptides, or oligos, etc.

work what we do. Everything coming from the emerging biotech customer.

Okay. This basket of 10 is a mix across different technologies that you have.

Is that a fair understanding, right? At least you have one molecule in each of them.

Got it. Lastly, is US pharma tariff creating any challenges in terms of business development, especially with the US customers, or you think the customers are also taking it with a bit of a pinch of salt because there's lot of to and fro, the clarity is not there and they are planning for long-term basis?

No, it hasn't had any impact on us. If you look at the nature of our business, most of our commercial products are with the Big Pharma and they have entered into separate arrangements with respect to the tariff part with the administration.

The early stage biotech cluster for us is still in the early development or in the late development stage, they are still in that drug candidates category for us. At least till now, we haven't had any impact with respect to the tariff announcements.

Your point is good point that, I think the the biotechs are taking this with equanimity. There's, as you as you yourself said, there's so much back and forth, nobody's very clear what the intent is.

The it seems to be the intent is very undefined and and in the long run, it doesn't really matter. That's how people have taken this view now that, directionally there there should India and China are sorry, India and America are are in on the same side.

I think we're everybody's okay with it.

Hi, thanks for giving the opportunity. Sir, just wanted to understand

Hello? Yeah.

Thanks for the opportunity. Just wanted to understand, a few of the commercial molecules which we were working with biotech companies were acquired by Big Pharma.

You had mentioned in the past that they are yet to be launched commercially by the Big Pharma because they were still doing some assessment, right? When do we expect that to be launched?

That's the first question. The second question, if you can share what your US biotech partner is talking about now, biotech funding environment and are you seeing increase in the inquiries?

Yeah. I'll

I'll take on the biotech funding side. See, biotech funding has been recovering and I think till about April the four months, it's gone up by about 50-odd percent year-on-year.

There's a recovery which has happened on the biotech funding side. We are also seeing that with respect to the requests which is coming in on the early stage development projects.

While the projects are smaller in size, but the number of requests which is coming in is increasing. Biotech funding is not a side of concern for us.

Now, with respect to the commercial molecule questions which you had asked for, see, last four molecules which went from our phase three pipeline to commercial last year, one of them was with a Big Pharma, the rest three were with the emerging biotech customers, and they have launched the product in the market. Maybe towards the end of the year, some maybe towards the middle of the year, it's launched, but the ramp-up will take some time.

They are still in the early phase of their launch in the market.

How should one read from the customer indication when can we expect the ramp-up happening for these products?

It takes 2 to 3 years to have the ramp-up because see, we might have mentioned the peak sales estimates of the four commercial molecules which went commercial last year, but that peak sales estimates is from typically from the analysts are 4 to 5 years from the launch date. It will take some time to launch because they will be looking at launching the molecule in one geography, then they are looking at filing, doing registrations in other geographies and launching it.

With respect to registrations also, it will take some time. It will be 2 to 3 years for to 2 to 3 years for the molecules to see that ramp-up happen on the overall sales.

The current contribution from these four molecules would be less than 5% or 2% meaningless, is that right?

No, not really, because they have launched it in the market, they had taken launch quantities from us. Ballpark, the current contribution from these four molecules will be in the range of closer to about 8% to 9% of our revenues.

When I talked about commercial molecules being about 60% of our revenues, 8-odd percentage ballpark will be from the new molecules which had been launched. 8% to 9%.

There's a lot of headroom to grow.

Understood. Understood.

Just back on the biotech funding part. In terms of our capacity to handle number of projects, right?

Currently, we are doing 100 projects. How should we think what is the peak capacity of inquiries that we can handle and how are we ramping that up?

As

you said, we have invested near Anthem our Unit 3 which is where we've put in a lot of labs so we can handle many more projects. I must also tell you when these projects come in different slices, right?

It is not that everything comes at one go. There'll be out of these 100 projects, some would be at the early stage of this development of the chemistry, some would be at a stage of optimizing that chemistry, and then another would be how we can get a commercial optimization of the process.

When there are so many aspects to it, we have different teams to address that. At any given time, we can handle a lot of projects.

It's not that we are constrained by that. You're right, you need more and more labs and that's what we built in Unit 3.

If the projects go to 200, we'll be fine. We'll be able to handle that.

Okay. Thank you everyone for attending this.

As we have said, our aspiration is to be the most admired, the most agile, and the one CRDMO that follows the best practices around the world. Our customers have shown their trust in us by being very sticky.

We have very long-term relationships with most of our customers, which is yielding us very good results. Going forward, I expect that to remain, and we are very confident about the future.

The investments that we have made will start to Unit 3 is already turning around and it's going to be in the positive territory this year. Unit 4 will be ready by the end of next financial year by then end next financial year.

We are in a very good place to become the leading CRDMO out of our country. After that, the sky's the limit.

Thank you for your confidence in us, and we'll work very hard to honor that confidence. Thank you very much.

Thank you, everyone.