Syngene targets software type growth

Syngene, the contract research subsidiary of biotechnology industry leader Biocon, expects to end the current year with a turnover of over Rs 100 crore, which will mean a growth of over 50 per cent.

It foresees a 30 per cent plus compound annual topline growth over the next five years while continuing to remain a highly profitable operation, according to Goutam Das, its COO.

In 2004-05, the company had chalked a 72 per cent rise in revenue to Rs 66 crore and an almost identical 70 per cent rise in net profit to Rs 27.5 crore. This gave it a net margin of nearly 42 per cent which is above even software industry standards.

In view of the likely anticipated growth rate, the company has undertaken a substantial Rs 40 crore expansion project close on the heels of one that has recently been completed.

A new capacity, also involving an investment of Rs 40 crore, was opened last October but is already fully utilised. By 2007, the company expects to take its technical headcount, of revenue earning chemists and biologists, to double of the present 350.

Das attributes the strong growth of both top and bottom line to the company's "very strong discovery capacity, while remaining a strictly services company." Explaining the way Syngene is going up the value chain, he says "over time we are getting deeper into the discovery process, helping customers discover drugs, doing hazard analysis involved in the process of scaling up. We do a lot of value addition in process development."

Explaining how Syngene differs from generics players, Das said "we do not follow any carm model but, for the most profitable part of our business, custom synthesise small quantities of a discovered drug which is acceptable to different countries and authorities." The aim is to demonstrate producing under current good manufacturing practices.

In doing this work, Syngene is able to get the help of personnel who work for Biocon's US FDA approved facilities. CROs themselves don't come under FDA certification. Das expects this work, which accounts for 20-25 per cent of the company's effort, to go upto a third over time.

"There is high value addition in the documentation. Hazard analysis of process development is extremely expensive in a developed economy. To get such work you need to have credibility. As Asia's first CRO, you can say we have done yeoman service to the industry by establising it can be done here," he claims.

The remaining three quarters of the company's work involves pure discovery research, identifying molecules and suggesting molecules to clients. This covers the first 3-5 years of the life of a molecule from the concept stage to addressing an unmet medical need.