Biocon arm Syngene rides knowledge services boom

India's knowledge based services are in good shape and expanding fast, going by the prospects that Syngene, the biggest and oldest private contract research firm focused on the early phase of drug discovery, sees before it.

The exported oriented firm, a subsidiary of Biocon, the biotechnology major, is likely to conclude the current year (2003-04) with a turnover in the region of $9 million, according to industry sources.

This will mean a growth of around 50 per cent over the pervious year. The company, whose customers include some of the biggest pharmaceutical MNCs like AstraZeneca, Bristol Mayer, Pfizer and GSK, is also highly profitable, contributing more to the group bottomline than its revenue share would indicate.

The nine-month results announced By Biocon in the runup to its IPO, indicate that Syngene, like the rest of the group, has in the period reached the Rs 26 crore turnover of the entire previous year (2002-03).

"We will maintain a hectic pace of growth," says Syngene CEO Goutam Das. In the current calendar year its staffing will growth 50 per cent to reach 300 by end-2004. It is adding 65,000 sq.ft of office space to make room for the new entrants.

The core Indian contract research industry (excluding clinical trials players) is still quite small, around $ 50-60 million, but is growing rapidly at 40-50 per cent a year.

Given such a pace, Das would not be surprised if it reaches a size of $ 2-3 billion in ten years' time.

The growth prospects are bright as India now accounts for only 0.7 per cent of the $ 4 billion global market for early phase drug discovery and chemical synthesis.

Contract research is a highly skilled service offering and growth depends on the adequate availability of graduates and PhDs.

"Enough graduates are available. What is more, a lot of talented Indians are returning from abroad. We have 35 PhDs working for us and all of them have worked outside the country at some time or other," reveals Das.

Syngene is primarily a contract research company, with 175 of its current 200 staff engaged in the work.

Contract research is undertaken in the early phase of drug discovery - conducting R&D in the pre-clinical stage (upto animal trials) to screen compounds so as to identify candidate drugs.

"It is really selling a research capability, a way of conducting people intensive research. And the name of the game, when industry growth prospects are bright, is learning how to step up operations fast," explains Das.

Syngene's second area of activity is custom synthesis of molecules. This involves manufacturing a small quantity of a new chemical entity (from 15 mg to 1-2 kg) for a drug company so that it can conduct trials.

"We are trying to go more into CGMP (current good manufacturing practice) involving production and documentation, as that's where the margins are."

The thrust in the next 18 months will be, one, to establish the company as a CGMP producer of lead molecules and drug candidates and, two, offer value added inputs for the discovery process in the area of medicinal chemistry.

While pursuing these initiatives, Syngene will retain its bread and butter role of a contract research organisation.