Company overview

Incorporated in 1993. Syngene (NSE:SYNGENE) is an internationally reputed contract research and manufacturing organization, which supports R&D programs from lead generation to clinical supplies. The company's multi-disciplinary skills in integrated drug discovery and development include capabilities in medicinal chemistry, biology, in vivo pharmacology, toxicology, custom synthesis, process R&D, cGMP manufacturing, formulation and analytical development along with Clinical development services.1

Syngene has state-of-the-art research facilities certified with ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007. The company's animal facilities are GLP certified by the Indian authorities and AAALAC accredited. Over the last 25 years, Syngene International has successfully offered these services to more than 362 clients including start-up companies, large pharma/ biotech, agrochemical, chemical, nutrition and animal health companies in the USA, Europe and the Asia Pacific including Japan and Australia.

Syngene has a strong corporate governance framework with a focus on client satisfaction, quality, safety, ethics and integrity. The company's ability to deliver significant value to its customers by leveraging its scientific skills, global mindset and India’s cost competitiveness differentiates it as one of the most preferred partners.

Syngene’s differentiated strength lies in its employee base of more than 4,200 highly qualified research scientists and its sustained investment in the latest technology to keep pace with the demands of innovative science. Over the past decade, the Company has consistently attracted and retained premium talent. It has also invested in setting up state-of-the-art infrastructure and world-class systems. Use of the latest software and technology has strengthened its ability to meet global compliance and quality standards as well as respond to clients’ demands in terms of new capabilities and technologies.



Syngene is a leading Contract Research Organisation in Asia providing end-to-end discovery and development services. The company's multi-disciplinary skills in integrated drug discovery and development include medicinal chemistry, biology, in vivo pharmacology, toxicology, custom synthesis, process R&D, cGMP manufacturing and formulation.2

The company's ability to seamlessly integrate its comprehensive capabilities differentiates it from its competitors. The company accomplish this integration by forming multi-disciplinary teams that work cohesively, monitoring projects continuously and proactively addressing and resolving critical issues.

  • Discovery Chemistry
  • Discovery Biology
  • Large Molecule Development
  • Safety Assessment
  • Chemical Development
  • Formulation Development
  • Stability Studies
  • Polymer Research
  • Integrated Discovery & Development
  • Clinical Development Services
  • Bioinformatics
  • Antibody Drug Conjugates
  • Oligonucleotide Synthesis
  • The company's Dedicated Centers


Syngene has world-class infrastructure with more than 1.87 million sq ft. of working space.3

Syngene strives to attract and retain the best talent in the industry and back them up with world class infrastructure and systems. All the laboratories are equipped with high-end instruments and equipment to support the various research and development activities. Syngene International has some of the best equipment in the lab, an excellent IT and communication system and an experienced team.

The company also have well established systems to maintain data confidentiality while working with multiple clients and have an impeccable track record over the last 25+ years. Syngene International has a comprehensive business continuity and disaster recovery plan. Syngene International has an established governance model implemented to successfully manage multiple client relationships. The governance structure varies based on the size and scope of the collaboration.

In line with the above, Syngene International has adequate infrastructure to expand its facilities based on the client requirements.

  • IT & Communication
  • Discovery Chemistry
  • Discovery Biology
  • Safety Assessment
  • Large Molecule Development
  • Process R&D and cGMP Manufacturing
  • Formulation Development
  • Stability Services
  • Polymer Research
  • Clinical Development Services
  • Chemical Development

Industry Overview

On average, pharmaceutical companies spend nearly 17% of their revenues on R&D in order to bring innovative medicines to the market. Global R&D investment by biopharmaceuticals reached a record USD 179 Billion (Bn) in 2018 and is projected to grow by USD 34 Bn, a compound annual growth rate (CAGR) of 3%, by 2024.4

R&D investment to develop new and improved products is also increasing outside the life sciences sector. Personal care, cosmetics, nutrition, agrochemicals and speciality chemicals are segments that have benefited from constant innovation and product development. For example, R&D expenditure of major agrochemicals companies has remained consistently high at 7-10% of overall sales for the past fifty years.

Contract Research Organisations

Contract Research Organisations (CROs) undertake R&D activities on a contract basis for other organisations. Activities that are outsourced to CROs include a wide spectrum of tasks from basic research to late stage development including: assay development, target validation, lead optimization, genetic engineering, hit exploration, efficacy and safety tests in animal models, as well as human clinical trials. Over the past decade, the contract research industry has witnessed rapid growth as companies increasingly outsource R&D activities to improve productivity and efficiency across their value chain.

The global CRO market is estimated to grow at 7.6% CAGR during 2019 to 2025, to surpass USD 61 Bn in terms of value by the end of this period. Access to relevant patients, willingness to participate in trials and competitive costs make clinical trial management an attractive service for many of the largest companies in the CRO sector. It is important to note that while Syngene has the capability to undertake small size trials, clinical trials do not represent a significant proportion of the current business model.

In terms of service type, the CRO market for early phase development services, which includes drug discovery, chemistry, manufacturing & control (CMC) and pre-clinical research, was valued at around USD 6.3 Bn in 2018. To mitigate the high risks associated with the early stages of drug development, drug developers are expected to continue outsourcing a significant part of their R&D activities, thereby underpinning CRO market growth.

The global research market can be segmented by therapeutic area. From this perspective, the oncology segment dominates the market in terms of revenue and is anticipated to grow by around 7.5% CAGR during 2019 to 2025. Biologics, also known as large molecules, have revolutionised the treatment of many serious diseases. As research and manufacturing activities of biologics are far more complex and expensive than small molecules, these activities are being increasingly outsourced by biopharmaceutical companies.

Opportunities in the CRO Industry

Increasing role of CROs in the R&D value chain

Healthcare CROs are playing an increasingly valuable role in the industry value chain, contributing at different stages throughout the drug discovery and development process. As the industry matures, R&D service providers have also acquired a breadth of scientific experience, newer technological capabilities, and the expertise to navigate regulatory complexities. With extensive scientific expertise, CROs serve as partners in innovation while delivering a broad spectrum of their clients’ early-stage research needs, reducing time to market for a drug, and promoting cost efficiency.

New therapeutic approaches

The CRO industry sees immense opportunities from advances in drug research and development, which are resulting in a surge in biologics and other complex therapies such as cell and gene therapies (CAR-T therapy), growth in therapy areas like immunooncology, rare diseases, neurology and rising demand for personalized medicines and treatments to target specific diseases.

Strategic partnering

With increasing engagement of CROs at different stages of discovery and development, strategic partnerships between clients and CROs are becoming more common. Both parties invest in the projects resulting in successful, long-term relationships.

Cost saving with outsourcing

To offset the steep cost of innovation, biopharmaceutical companies are increasingly seeking new ways of carrying out R&D operations through outsourcing. Small to mid-sized pharmaceutical companies, biotechnology start-ups, and organizations outside the life sciences sector often choose to access the R&D capability, capacity and scale they need through outsourcing rather than building their own capability internally.

R&D service providers can help innovator companies minimise investments in capital-intensive in-house facilities and convert fixed R&D expenditures into variable costs, thereby enabling them to balance investment risk.

Driven by the pressing demand for both affordable innovation and sustainable economic returns, R&D is increasingly taking place in a dynamic ecosystem, opening up opportunities for small and medium-sized companies and pharmaceutical start-ups to command a greater share of R&D in future.

Business Overview

The Company now has four business divisions: Dedicated R&D Centres; Discovery Services; Development Services; and Manufacturing Services. This follows the sub-division of the Development and Manufacturing Division reflecting the need for a closer focus on manufacturing as the new API manufacturing facility in Mangalore comes on stream.

The Dedicated R&D Centre model provides ring-fenced infrastructure, scientific expertise and support personnel exclusively dedicated to handling a particular client’s research programmes. The Discovery Services division offers all disciplines associated with early research, from target identification and high throughput screening to delivery of drug candidates for development. The Development Services division focuses on activities from pre-clinical to clinical trials for validating the safety, tolerability and clinical efficacy of the selected drug candidates. The Manufacturing Services division delivers clinical supplies, regulatory batches, and supplies for initial commercialisation of small molecules. The Company also has a state-of-the-art biologics manufacturing facility.

Dedicated R&D Centres

Syngene operates four dedicated R&D centres for Bristol-Myers Squibb (BMS), Baxter Inc., Amgen Inc., and Herbalife. The longstanding collaborations with these global leaders, extending between five and fifteen years, reflect the confidence the Company has secured for its services. The Company continues to invest in new technologies, scientific expertise, systems and processes in these centres - in partnership with the client - in order to deliver reliable, high quality results while optimising efficiencies.

During the year, the Company achieved steady performance in its dedicated R&D Centres.

Discovery Services

The Discovery Services division, comprising the scientific disciplines of chemistry, biology, safety assessment, and research informatics, delivered robust growth throughout the year as the result of contract renewals and expansion of partnerships with existing clients, as well as the onboarding of new clients. Several FFS-based collaborations moved to an FTE-based model, reflecting the maturing of these partnerships and affording additional value. In addition to expanding Syngene’s presence in the human life sciences sector, the division saw growing demand from clients in other sectors, particularly animal health.

Further operational integration of the core discovery-related disciplines, as well as enhanced collaboration with Development Services, has augmented Syngene’s position as a service provider for fully integrated therapeutic discovery. Syngene’s range of capabilities and extensive drug discovery knowledge, spanning from the early stages of target identification and validation, through to preclinical evaluation and preparation of drug substance and drug product for clinical testing, makes the company a very attractive partner and offers opportunities to provide services to new customer groups such as start-ups, academia, venture capital, government and not-for-profit organisations.

A key highlight for Discovery Services during the year was the opening of a state-of-the-art research and development centre in Hyderabad, India; a location that offers many advantages due to its excellent infrastructure, good connectivity, and extensive scientific talent pool. With strong environmental credentials, the first phase of the centre will house 150 Discovery Chemistry scientists. It is equipped with an internet-based system providing anytime, anywhere, monitoring of the operational status of systems, thus minimising downtime. It is also equipped with electronic laboratory notebooks - an important step towards total digitisation.

A key scientific advance during the year was the extension of the company’s cellular and gene therapy research capabilities into CAR-T therapy, an innovative and leading-edge approach to treating cancer. Several projects within Discovery Biology covering hypothesis-testing and validation of new biological targets, as well as the exploration of novel mechanisms related to CAR-T therapies, are underway.

The Safety Assessment unit added a standalone histopathology capability to address specific requests from clients. This functional area within Discovery Services also added new technical capabilities for the conduct of hemocompatibility tests and safety pharmacology studies. A new vivarium will provide increased capacity to study the effects of novel therapeutic agents on health and disease.

Discovery Services has been actively exploring strategic partnerships with other leading research services companies to augment the range of capabilities accessible to clients as well as to expand Syngene’s presence into new markets. Among these capabilities are a range of hit identification techniques and in vivo capabilities in non-human primates.

Development Services

The Development Services division delivered steady performance during the year. New client projects were undertaken across the full range of services and multiple modalities. In particular, two new strategic collaborations in animal health increased the focus on that sector.

Notable scientific achievements during the year included the delivery of registration batches of multiple, modified-release tablet formulations of a drug that treats symptoms of multiple sclerosis for a Russian client — the result of a four-year collaboration. The Company also developed and validated a Human Papilloma Virus (HPV) assay, a test system increasingly being used for cervical cancer screening.

Building on the value being delivered as a result of taking an integrated approach to Discovery Services, the Company’s Development Services embarked on a similar programme to strengthen the links between units, thus generating opportunities to gain a greater share of each client’s R&D activities.

Manufacturing Services

The construction of the API manufacturing facility in Mangalore, India, was completed on schedule and the facility will undergo qualification testing in the coming year. Once fully operational, it will allow the Company to offer commercial-scale manufacturing for small molecules.

Other major investments include the upgrade of the current development facility to meet Good Manufacturing Practice (GMP) requirements for High Potency Active Pharmaceutical Ingredient (HPAPI); installation of accelerating reaction calorimetry for ensuring process safety when scaling up production; digitisation of the Human Pharmacology Unit (HPU); and installation of a high throughput screening platform. A pilot fill-finish facility for injectables is currently under construction.

Biologics Development and Manufacturing

Biological medicines have become an increasingly significant part of the biopharmaceutical pipeline and company R&D budgets are being adjusted accordingly. To capture this shift, Syngene has invested in the latest R&D technology for large molecules and the Company’s Biologics unit is an emerging capability. Two 2KL bioreactors were commissioned during the year and a microbial manufacturing facility is being set up, strengthening the biologics manufacturing capacity.

New client wins were recorded in the year to add to the expansion and renewal of contracts with existing clients. The Company also entered into contracts with leading industry players for the development of biologics in animal health.

The scientific solutions delivered during the year include supplies of clinical trial material for three novel molecules for a variety of indications to clients around the globe. The first viral clearance study for marketing authorisation application was concluded for one of India’s leading life sciences companies. The Company also achieved continuous supply of materials to a global consumer goods company. Yeast-fermentation in single-use bioreactor was successfully completed, thereby enhancing the Company’s biologic development strengths.

Financial Overview


During FY20, the Company saw a 10% growth in revenue from Rs. 19,007 Mn in FY19 to Rs. 20,935 Mn, which includes interest income of Rs. 816 Mn. Excluding the impact of the one-time pass-through billing of Rs. 400 Mn in the previous year, the revenue for FY20 grew at 13% driven by strong performance across all businesses and continued growth momentum in Discovery Services.

During FY20, the Dedicated Centres constituted 31% of sales, Discovery constituted 32%, and the rest came from Development Services and Manufacturing. In FY19, the Dedicated Centres constituted 32% of sales. Discovery constituted 29%, and the rest was from Development Services and Manufacturing.


The Company’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) in FY20 grew by 14% to Rs. 6,995 Mn compared to Rs. 6,119 Mn in FY20. Profit After Tax (PAT) grew by 24% to Rs. 4,121 Mn, as against Rs. 3,316 Mn in FY20. EBITDA as a percent of revenue improved by 122 basis points to 33.4%.

EBITDA improved in FY20 driven by lower material costs, favourable foreign exchange fluctuation supported by lower growth in other expenses arising out of ongoing efforts to optimise cost partially offset by increase in employee cost.

Despite increase in depreciation and consequential tax cost on the exceptional gain realised during the year, PAT as a percent of revenue improved by 224 basis points to 19.7%. PAT adjusted Despite increase in depreciation and consequential tax cost on the exceptional gain realised during the year, PAT as a percent of revenue improved by 224 basis points to 19.7%. PAT adjusted for the exceptional gain and consequential taxes improved by   0.1% as a percent of revenue to 17.5%. The Company’s diluted earnings per share increased to Rs. 10.35 in FY20 as against Rs. 8.36 in FY19.

Cost of materials

The cost of materials consumed in FY20 decreased by 2% to Rs. 5,194 Mn, accounting for 25% of overall expenses. Material costs as a percent of overall revenue decreased by 314 basis points to 25%, driven by the change in revenue mix in favour of Discovery services and the impact of the one-time pass-through of approximately Rs. 400 Mn recorded in the first quarter of the previous year.

Employee benefits expense

The employee costs for the year increased by 23% to Rs. 5,804 Mn. The increase is attributable to three main factors. The first of them being ongoing employment costs, which has grown around 12%, a further 3% of the increase came from the addition of the R&D facility at Hyderabad, the new research facility in Bangalore and from opening of the Mangalore API manufacturing facility. The third and the final factor was the additions the company made to the senior and middle level leadership to create an organization with the skills and experience to take Company through the next phase of growth. The total employees in the company increased from 4,619 as of 31st March 2019 to 4,946 as of 31st March 2020. As a percentage of total revenue, employee costs for the year represent at 28%, higher from the previous year’s average of 25%.

Depreciation and Amortisation

Depreciation and amortisation increased to Rs. 2,193 Mn from Rs. 1,642 Mn in FY19. This reflects the additional depreciation on the new investments in the Hyderabad facility, expansion at its main Bangalore facility and completion of the construction phase of the Mangalore commercial API plant.

Finance costs

The Finance costs increased by 7% to Rs. 346 Mn in FY20 compared to Rs. 323 Mn in FY19, with the average cost of debt being maintained at 3% p.a. The increase in finance costs is linked with an increase in short term borrowings. Interest coverage is adequate at 14 times during the FY20.

Tax expenses

Tax expenses for the year stood at Rs. 1,048 Mn in FY 20 in comparison to Rs. 838 Mn in FY 19. The increase in effective tax rate in FY 20 is primarily due to tax cost related to the exceptional gain arising from the insurance receipt in the current year

Recent developments

Syngene Intl Standalone December 2020 Net Sales at Rs 584.10 crore, up 12.52% Y-o-Y 5

January 22, 2021; Reported Standalone quarterly numbers for Syngene International are:

  • Net Sales at Rs 584.10 crore in December 2020 up 12.52% from Rs. 519.10 crore in December 2019.
  • Quarterly Net Profit at Rs. 101.80 crore in December 2020 up 11.14% from Rs. 91.60 crore in December 2019.
  • EBITDA stands at Rs. 192.70 crore in December 2020 up 11.32% from Rs. 173.10 crore in December 2019.
  • Syngene Intl EPS has increased to Rs. 2.56 in December 2020 from Rs. 2.31 in December 2019.


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Created by Asif Farooqui on 2020/09/21 06:45
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