Syngene International Adapts Growth Guidance Amidst Challenges

Syngene International Adapts Growth Guidance Amidst Challenges
Syngene International Adapts Growth Guidance Amidst Challenges
Syngene International Adapts Growth Guidance Amidst Challenges
Syngene International Adapts Growth Guidance Amidst Challenges

Syngene International Adapts Growth Guidance Amidst Challenges

Syngene International Adapts Growth Guidance Amidst Challenges

Syngene International Adapts Growth Guidance Amidst Challenges

Syngene International has adjusted its FY24 growth guidance, lowering it to mid-teens on a constant currency basis from the earlier high-teen growth projection. This adjustment comes as the Discovery Sciences segment faces challenges, particularly in the US-based biotech segment.

While global demand growth in the Discovery Sciences segment remained relatively strong, the US biotech segment has shown signs of slowed year-on-year growth. This slowdown is attributed to the impact of a high-interest rate environment, leading to the diversion of funds to other avenues. Companies are also adjusting to a new funding environment, which is expected to normalize by the fourth quarter.

Outlook for the US Biotech Segment

Syngene’s Managing Director and CEO expressed optimism regarding the US biotech segment’s growth. He expects the segment’s growth to bottom out in the third quarter and anticipates a recovery by the fourth quarter

Despite the growth guidance adjustment, Syngene anticipates that EBITDA (earnings before interest, tax, depreciation, and amortization) margins will remain at around 30% in FY24. The company’s reported EBITDA margin for the September quarter was 29.6%.

Syngene’s strong performance in the first half and second quarter of FY24, particularly in its Development and Manufacturing Services segments, has contributed to its resilience in the face of challenges. The company has added new capabilities in its Development Services, aiming to meet market demand for agile, cost-efficient early-phase development and scale-up services. In its Manufacturing segment, progress has been made on a long-term biologics partnership with Zoetis.

Upcoming Acquisition and Benefits

The acquisition of a multi-modal facility from Stelis Biopharma Ltd, set to be completed in the ongoing quarter, is expected to bring benefits to Syngene’s earnings growth by FY25.

Syngene’s reported revenue from operations for the quarter ending September 2023 saw an 18.5% year-on-year growth, with a 15% growth in constant currency terms. Profit after tax (before exceptional items) for the quarter increased by 20% year-on-year to ₹122 crores.

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