“Syngene International Q3 FY'25 Earnings Conference

Call”

January 23, 2025

MANAGEMENT: MR. JONATHAN HUNT – MANAGING DIRECTOR &

CHIEF EXECUTIVE OFFICER, SYNGENE
INTERNATIONAL
MR. DEEPAK JAIN – CHIEF FINANCIAL OFFICER,
SYNGENE INTERNATIONAL LIMITED
MS. NANDINI AGARWAL – SYNGENE INTERNATIONAL
LIMITED
 Syngene International
January 23, 2025

Moderator: Ladies and gentlemen, good day and welcome to Syngene International's 3rd Quarter FY'2025
Financial Results Conference Call.

As a reminder, all participant lines will be in the listen-only mode and there will be an
opportunity for you to ask questions after the presentation concludes. Should you need assistance
during the conference call, please signal an operator by pressing "*" then "0" on your touchtone
phone. Please note that this conference is being recorded.

I now hand the conference over to Ms. Nandini Agarwal. Thank you and over to you.

Nandini Agarwal: Good evening, everyone. Thank you for joining us on this call to discuss Syngene's 3rd Quarter
and Nine Months Results for FY'2025.

To discuss the Financial and Business Performance for the period, we have on this call today,
Mr. Jonathan Hunt, Syngene's Managing Director and Chief Executive Officer and Mr. Deepak
Jain, Chief Financial Officer.

After the opening remarks, Jonathan and Deepak will be happy to answer any questions you may
have.

Before we begin, I would like to caution that comments made during this conference call today
will contain certain forward-looking statements and must be viewed in relation to the risks
pertaining to the business. The Safe Harbor clause indicated in the “Investor Presentation” also
applies to this conference call. The replay of this call will be available for the next few days, and
the transcript will be made available.

With this, I now turn the call over to our Managing Director and CEO – Mr. Jonathan Hunt.

Jonathan Hunt: Thank you and thank you to everybody for joining the call today.

As always, my remarks will cover an “Overview of the Key Financials and Market Trends for
the Quarter” before getting into any “Operational Strategic Highlights,” I will then hand over to
“Deepak to Provide a More Detailed Insight into the Financials in his Remarks both for the
Quarter and for the First Nine Months of the Year.”

We are pleased with the performance in the 3rd Quarter, return to growth and I think it sets us
on the right trajectory for the rest of the financial year. Reported revenue from operations for the
quarter came in at Rs.944 crores, up 11%. We benefited from a favorable exchange rate between
the US dollar and the rupee that resulted in approximately an 8% increase in revenue from
operations in constant currency terms, saw 3% FX benefit.

Looking at the growth sequentially:

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January 23, 2025

Revenue from operations increased by 6%. I think that's an indicator that things are moving in
the right direction. Operating EBITDA was up 23% to Rs.284 crores. So, we delivered good
operating leverage with the operating EBITDA margin increasing by around 300 basis points.
So, that came in as 30.1% for the quarter.

Reported profit after tax after exceptional items for the quarter was up 18% year-on-year to
Rs.131 crores. This reflects good underlying performance and despite the tax-related one-off
that you will hear more from Deepak shortly. So, during the quarter there were signs, I think, of
stabilization in the US biotech funding environment. That said, the market didn't recover as
quickly as we'd anticipated when we set our guidance at the beginning of the year. So, while we
called the return to growth in the direction of travel, I think correctly the timing feels like 8, 12
weeks off. So, we will cover more of that when we comment on expectations for the full year.
But back to growth in the quarter, directionally in the right way took a little bit longer in the year
than I anticipated when I first set the guidance at the beginning of the year.

Discovery Services contributed to the growth in revenue in the quarter as well, marked by
collaborations with mid and large pharma companies on pilot projects. Last quarter, we had quite
a discussion around biopharma companies looking for alternatives to China as they rebalance
their supply chains, the partnering through pilot projects and they're using these as a way to
select their longer-term partners. And during the quarter the initial pilots converted through for
us into longer-term contracts and of course, they then have the opportunity to contribute to
growth next year.

The performance of development and manufacturing services remain steady, driven by biologics
with repeat orders from existing customers and also through new collaborations on integrated
projects that cover anything from drug development to clinical stage manufacturing.

To sort of conclude, performance in Q3 was positive with a return to growth, good momentum
across the business divisions that put us on the right track for the next quarter, we made good
progress on our strategic priorities, and I think we are moving in the right direction to gain in
that longer-term, China Plus One trend.

So, with that, let me hand over to “Deepak and he will give you More Detail on the Financials.”

Deepak Jain: Thank you, Jonathan. Good evening, everyone.

Let me walk you through our “3rd Quarter Performance, followed by a Review of the Nine
Month Results and an Update on our Outlook for the Fiscal.”

As we had indicated in the year, we expect growth momentum to build in the second half of the
year and Q3 marks the return to growth on a year-on-year basis. As highlighted by Jonathan,
growth during the quarter was driven by performance across all divisions.
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January 23, 2025

Operating EBITDA margins came at about 30.1% for the quarter compared to 27.5% in the
previous quarter and 27.1% in the same quarter last year. Operating EBITDA margins benefited
from lower material costs during the quarter which as a percentage of revenue from operations
declined from 27.8% to 25.2% in the 3rd Quarter. This was driven by a change in the business
mix and some efficiency gains.

Material costs are likely to be in the range of 26% to 28% as we had guided earlier.

Staff cost increased by 14% year-on-year, primarily driven by salary increments and recruitment
in skill areas needed to build capabilities in the business.

With a focus on deployment of energy efficiency measures, renewable energy now comprises
96% of our total energy consumption.

Other direct costs remain flat during the quarter as compared to the same quarter last year.

Moving on to other operating costs, which increased by 18% year-on-year, largely driven by
investments in digital initiatives, maintenance and upkeep of expanded facilities and
infrastructure. This broadly remains the same as percentage of revenue through this year at
around 13%.

Turning now to Treasury and our Hedging Performance. Revenue for the quarter was hedged at
around 85.3 per dollar. The average spot rate during the quarter was lower at about 84.8, resulting
in a hedge gain. As a reminder, we hedge most of our sales for a 12 month period, hence any
change in spot rate while is reflective in the revenue gets adjusted in the hedge rate as a hedge
gain or loss in the P&L. The company saw a hedge gain of 2 crores against a hedge loss of 12.4
crores in the 3rd Quarter of the previous year.

Operating EBIT was up 42% year-on-year, supported by stable depreciation cost of about Rs.109
crores similar to the last year.

Interest expense increased by 15% year-on-year due to an increase in lease liabilities.

The other income for the quarter was Rs.18 crores compared to Rs.29 crores in the previous
year, which included a one-off item relating to income tax refund amounting to Rs.15.8 crores
in the same quarter last year and Rs.2.5 crores in Q3 FY'25.

Moving to income tax, during the quarter, the company chose to settle income tax dues for prior
year amounting to Rs.9.5 crores under Vivad Se Viswas Scheme.

With facilities coming out of the favorable tax base created by the SEZ status adjusted for prior
year taxes I mentioned, the reported effective tax rate stood at 22.2% against 19.3% in the same
quarter last year.
 Syngene International
January 23, 2025

Reported profit after tax before exceptional items increased by 14%, after exceptional items
grew by 18% to Rs.131 crores.

Turning the Performance in the First Nine Months of the Year. Revenue from operations was up
2% year-on-year in reported currency, flat in constant currency as early softness in the first half
of the year was offset by the recovery in the 3rd Quarter. This growth was marked by return to
growth in discovery services division as well as continued growth in the Syngene CDMO
division with increased traction in biologics.

Despite decline in revenue and EBITDA in the first half of the year, the 3rd Quarter revenue
growth and improvement in margins enabled us to report flat year-on-year EBITDA for the nine-
month period. The operating EBITDA margins stood at 26.6% compared to a 27.1% in the same
period last year.

While raw material costs benefit from gain efficiencies in biologics, investments in people,
digitization initiatives, in addition to decline in revenue in the first half of the year, impacted
margins. The trend of operating expenses in the first nine months of the year broadly reflects
that of the 3rd Quarter.

Reported PAT after exceptional items decreased 3% year-on-year to Rs.313 crores due to an
increase in depreciation on account of investments made in the last 12-months and a decline in
interest income due to lower cash balance as we utilize the cash to acquire Biologics Unit from
Stelis Biopharma in Q3 of FY'24.

We continue to invest in the expansion of capacities and capabilities in technological

advancements to drive long-term growth. Over the first nine months, we invested a total CAPEX
of around US$34 million, approximately 50% in research services and approximately 25% in
biologics to upgrade Unit-III, the manufacturing facility that we acquired last year. We continued
our investments in digitization and automation, which we believe are essential for increasing
efficiencies in our business. We maintain a strong balance sheet and after meeting our CAPEX
for the quarter, we have a net cash of Rs.838 crores as of December 2024.

Finally, let me say a few words about “Guidance.” Revenue trajectory in the first half of the year
was as anticipated. The 3rd Quarter performance was back to growth after three quarters of
decline. The growth observed in the quarter indicates that market dynamics, particularly within
the US biotech sector, are stabilizing. As mentioned by Jonathan, the recovery in demand, which
was expected in the second half of the year, experienced a delay of approximately eight to 12
weeks.

We saw initial pilot projects with large and mid-size pharma companies starting to convert into
longer-term contracts. We are also seeing positive momentum in the CDMO division led by
biologics.
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January 23, 2025

We expect the growth momentum to continue in the fourth quarter of this financial year. Despite
challenges faced in the first half of the year, we expect to close the full year with single digit
revenue growth and a flat track.

As communicated in the last quarter, we expect operating EBITDA margins recovery to continue
in the fourth quarter, which should lead to a full year margin around the same as last year in the
high 20s as we have guided previously.

Our CAPEX program for the year remains on track at around 60 million by the end of the year.

While we remain cautiously optimistic, we continue to focus on executing in line with our
strategies and are investing in the right capacity and capabilities to position the company for
future growth.

I will now hand it back to the operator and we will take a few questions.

Moderator: We will now begin the question-and-answer. We will take our first question from the line of
Shyam Srinivasan from Goldman Sachs. Please go ahead.

Shyam Srinivasan: Just on the revenue guidance cut, right, so I think earlier we had high single digit growth. I know
it started with range high single digit to low double digit. Now, can I assume like mid-single
digit dollar like 5%? I am not asking you to pin down a number but just trying to see this
trajectory of revenue revisions downwards. If you could help us understand with the qualitative
comment around eight to 12 weeks but in terms of when we started the year versus now what's
been the biggest miss for us in terms of expectation versus reality? And two, if you could also
help us give the split of the businesses between CRO and CDMO, right, research versus CDMO,
has there been a mix shift in the nine months or maybe in the forecasted 12 months so that we
can get a sense of where the weakness is higher or lower? So, those are my two questions.

Jonathan Hunt: I shall try and color in a bit more and help you think about it. I mean, what I was trying to get at
with my comments, our guidance at the beginning of the year is two sets of forecasts really, isn't
it, because I have to trip. Let's take a view on what we think the rate of recovery in the US
biotech funding and then flow through to expenditure market is and then I had to try and take a
view on what we think our share within that market is. And I think the comments I was alluding
to you to is the rate of stabilization in the biotech funding took longer in the year than what we'd
included in our original guidance. I was hopeful that we would stabilize clearly in 2Q and I think
it stabilized more in 3Q. If you actually look at our ability to win share in, it looks on plan to
what I originally expected, just phase shifted out by those eight to 12 weeks. So, that's what, the
coded language if you are decoding what were we saying in the press release in the comments
was exactly that. It's good to be back into growth in the 3rd Quarter plus 11%. I just think that
the external environment stabilized a little bit later in the year than I'd originally baked into our
guidance when we gave it. And then I am sure as the earning seasons go through, you will read
that across into the performance of others and other comments and we will all piece together the
 Syngene International
January 23, 2025

jigsaw at the end of the earnings cycle. As to the split, I think and again this is intuitively
embedded in it. If it's US biotech funding, it's more likely to be in research because that's what
they spend their money on when they rave in. So, I think that's probably true. Does that help?

Shyam Srinivasan: Yes. So, maybe you put this number out only once a year. So, is it fair to assume like 100, 200
basis points of that 60% has actually come off, right? I am trying to assess the decline in the
CRO business. I think that's what we are trying to assess, Jonathan.

Jonathan Hunt: It's growing; it grew in the 3rd Quarter.

Shyam Srinivasan: Just macro. There's been a delay in the whole US Biosecure Act being cleared by. So, I am not
asking you to comment on legislation, but from a conversion of these projects, like you said,
there's a pilot project that has been converted. Has there been any behavioral change or are
people now reluctant to kind of or there is the urgency to move things out of China, let's assume,
has that reduced, so any comment?

Jonathan Hunt: Again. I don't know what would terrible thing to the CEO asking me analyst question rather me,
it is other way around. Well, how would you interpret all the comments I've made throughout
the year and the year before and things like Biosecure. I think I've been fairly constant and
saying, at best, it's the cherry on the top of the cake, it isn't the cake, it's as much or more so
about pandemic learning, COVID supply chains, it's around structural rebalancing around it's
about risk committees. I think I and many other CEOs have not placed a single point emphasis
on the Biosecure Act. Now, if you're using that as a shorthand for the whole thing, I get it. But
the big change in the Biosecure Act was the moment that they took the implementation deadline
from, you've got to get it done in 12 months to you've got to get it in eight years. But that
happened over a year ago. And again, that's the 3rd Quarter I've made that comment. I think it
feels like it anyway. So, I don't think it's that. I think it's more structural. Here's a good word for
you. It's more tectonic, like plate tectonic, it's going in one direction, it's powerful, but it's slow
moving, steady moving, however you interpret tectonic. But that's what I've been trying to say
to you all year, I said it over here. I said it on public dias and conference calls. In most industries,
that would be considered to be a reasonably positive structural tailwind that was going to play
out all them, you can now go back to the last two quarters, this will play out over many years,
not over weeks. So, there you go, Srini. You've got me in a talkative mood and I've colored in as
much as I can. So, that's what I think is going on across the industry. And that's good, that's a
positive for the Indian industry to have that sort of structural dimension to it.

Moderator: Next question is from the line of Chirag Dagli from DSP Mutual Fund. Please go ahead.

Chirag Dagli: Jonathan, you talked about positive momentum in the CDMO division led by biologics. Does
this mean that the new facility, which is going to come on stream, you already have customers
for that and how should we think about ramp up of that capacity as and when it comes on stream?
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January 23, 2025

Jonathan Hunt: Super question. No, it doesn't mean that, no, it doesn't mean that as in I made no comment on it.
The whole point we were telling you is about the acquisition of that facility. We were running
out of capacity because of the rate of growth we have seen over the last two or three years in our
biologics. We were getting close to me being concerned if we continue at this growth, we will
have to turn clients away because we won't have capacity. That prompted us to think do we
accelerate our internal build out. And that's still left us with an overhang risk, which was you
can't build plants that quickly. And then we saw a good opportunity, which I think was good
value. We paid cents on the dollar for that facility, and we have invested and then we told you,
look, don't start plugging anything into your models. It's 12 months just for us to do the
renovation and the retooling and the reengineering and that 12 months is not yet that ends this
quarter and we are on track. So, all that happens probably in April is that facility is ready to do
work for clients that want to place work there and then we are into the selling cycle. But I am
going to look across at my finance colleagues and not if I am getting this right. The life cycle on
the plant like that is 20, 30 years. So, we will try and sell capacity, but I don't know, I am not a
big believer in hockey stick moments in any sort of business. Does that make sense?

Chirag Dagli: Understood. Fair point. The other question is, Jonathan, we have spent two years now with single
digit kind of growth in FY'24 and FY'25 and you always articulate the reasons well. The question
is the next two years or maybe three years, how different should they look versus the last two
years where we spent single digit while we continue to invest in the business for the longer term?
But revenue growth -

Jonathan Hunt: Yes, super like I get. You know, I am not going to give you a two-year guidance, I would look at
the 3rd Quarter results. But let's just minimize it to quarter, shall we? Minus two last quarter,
minus two the quarter before plus 11 this quarter, you can triangulate as Srinivasan did from
Goldman in his first question, what does it mean for the full year, fourth quarter. I think feels
like the 3rd Quarter. So, there you go. I am not prepared to go into next year, but at least I have
told you a bit about what I think is happening in this quarter and next. We are back into growth.
We will update you in April when I've had a chance to really have a look at the annual operating
plan. But I see very similar patterns. If I look across either our Indian peer group or look more
broadly, we don't look to some of anything, we went into the slow down a little bit later than
them, we have come out of it maybe a quarter earlier than many of them, but was all largely
experienced the same. I think slowdown in research because of slowdown in biotech funding
and therefore slowdown in expenditure and I think it stabilized. We will see how much it
rebound.

Chirag Dagli: What is your employee strength and scientific talent pool strength?

Jonathan Hunt: I need to look it up, but we publish it once a year in the annual report. It's largely unchanged.
There's some very good scientists though.

Chirag Dagli: So, it's largely unchanged from the March '24 number as on today?
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January 23, 2025

Jonathan Hunt: I think so, but I'd have to go and look it up. Not something that we report quarterly.

Moderator: Next question is from the line of Alankar Garude from Kotak Institutional Equities. Please go
ahead.

Alankar Garude: Sir, one question is on the technology bit or the capabilities bit. Now out of the various
capabilities, technologies such as say lyophilization, low chemistry, column chromatography
which we offer, which ones would you say are our forte? And similarly, I mean which would be
the technologies where you think that there is some catching up to do in terms of the depth of
our offering?

Jonathan Hunt: Clearly we think we do a good job in large molecule biologics, whether it's discovery,
development or manufacturing of those. In the small molecules, actually all of the things that
you listed are sort of core competencies where we are right in the middle of the pack where I
think we are very solid on our small molecule development and manufacturing. And then once
you go into the research services, remember, historical research is the biggest part of the
business. You're right on the frontier of many things. Whether it's some of the advanced
techniques in biology or in chemistry, I think we are doing some really good innovation work.
But if you roll it back to strategy, our intention is to be broad enough on our scientific capabilities
that we can meet the needs of a large proportion of the market, particularly recognizing that a
lot of our customers also have large scientific footprints, and they don't want to be having
managing a multiplicity of partners. They quite like that bit of one-stop shopping. They can align
culturally, operationally, and then get everything they need. So, we are intentionally broad
scientifically.

Alankar Garude: The second one is more of a clarification. Last month in December, there was this FDA letter
which came for Librela. This is not really a new issue, but I just wanted to understand, get
confidence from you whether that $50 million annual number, do you foresee any risk to that at
all?

Jonathan Hunt: I couldn't comment on the FDA letter. I mean, that's a question for Zoetis. I will go right the way
back. The $50 million I think what I actually said at the time was an answer to a question, how
do you want us to think about this? And I said $500 million over 10 years will average around
$50 million a year. Beyond that, we don't call out individual quarters or months of production
partly because it's clearly competitive and sensitive for our clients. I don't think they would want
to be disclosing that to their competitors. My understanding is it's doing well in the marketplace
and we are very happy with our relationship.

Alankar Garude: So, essentially, on that $500 million number, you don't foresee any risk as now?

Jonathan Hunt: I don't think I said that, but then I don't know the CEO, you're not a professional risk, I don't
know what it would be. I spend a lot of time worrying about what could go wrong to make sure
it doesn't go wrong. Please don't misinterpret. I am not making any suggestion around that, but
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you did ask me a question to prognosticate for another eight years. I don't think I could do that.
But today the relationship is good, the product is doing well, I understand certainly our delivery
and manufacturing has been good and continue to get better. Very happy to have that relationship.
I hope we do a lot more with Zoetis, with other animal health companies and with human health
companies.

Moderator: We will take our next question from the line of Madhav Marda from Fidelity International. Please
go ahead.

Madhav Marda: My first question was if I understand right and correct me if I am wrong that we have two
facilities, one is the one which we acquired and one is the Mangalore API facility, both of them
seem to be running lower on the utilization side. So, just what I wanted to understand is how
much of a drag does that have on our profitability given that there might be operating deleverage
that you're facing with those sites currently, so if you could give us some sense to understand?

Jonathan Hunt: Just the basic construct of the question, no, we don't have just two facilities, we have an entire
manufacturing campus facilities here, our main campus in Bangalore around the corner, we have
got Unit-III which we have added, which is a large molecule one, we have got a campus with
more than one block over in Mangalore. Yes, so to some extent your question is a derivative of
the construct.

Madhav Marda: No, my point was that these two facilities are the ones which are a bit underutilized currently,
right, where one we are renovating the site and one way -

Jonathan Hunt: Super. Well, it's not unutilized. One of them hasn't opened yet.

Madhav Marda: My simple question was how much of a cost very broadly are we incurring at these two sites so
we can get a sense of the underlying business profitability given that initially as you scale up the
plants, you might be incurring some OPEX at both the facilities, right?

Jonathan Hunt: Love the question. Not sure we have ever given that level of detail. I am looking at my finance
colleagues anything helpfully I can do. I mean, you've got turnkey operations in there. Whatever
you need to bring a facility up to speed, it won't be an enormous amount. But beyond that, I am
not sure I can give you that level of color.

Moderator: We will take our next question from the line of Bharat Sheth from Quest Investment. Please go
ahead.

Bharat Sheth: I want to understand how much we integrate the IT on the research side, expedite as well as AI
part side, so if you can give some color in our road map for the same?

Jonathan Hunt: Gosh, we could be here till midnight if we really talked about it. It's quite an exciting area. We
do, do it. So, we have within the company of course our own AI informatics and sort of digital
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research if you think in that way group. So, as I was saying a good question. There's an awful
lot of excitement and there's column entries written every day around Gen. AI application in all
walks of life and we are making good progress on that journey. We have those sort of decision
support tools already operating in the company, whether it's use of things like alpha fold, you
will have read about that to help you predict, how proteins fold and therefore help you in drug
discovery, whether it's AI augmentation of scientific decision making, we have algorithms that
will go and look at all of the scientific literature in the world and help our scientists understand
what's already known so they can add to it with new innovations. We have digital ways of helping
us predict the MPK distribution properties. So, it's real. I don't know. I think it's a little bit like
the moment where the world started talking about the internet and then just not being able to live
without it. Certainly, I find in my home life, with my youngest son, he can barely breathe unless
he has access to the internet. I think that's what we are going to see in the world of work. We
will build those AI tools into everything we already do scientifically. Does that help? I am not
sure I told you anything specific other than what we are doing.

Bharat Sheth: Yes, but if you have to think of frosssm say two, three years perspective, how do you think that
can really benefit on the efficiency side or bringing down the cost, so any color do you have at
this moment or will have to wait?

Jonathan Hunt: Certainly, if you find ways of doing things quicker… I think the real issue in innovation, let's
split it between the innovative bit of the company, finding new drugs, creating new knowledge
and then the rest of it. In the innovation bit, you just want to help you, make the right decision
more often, make the right decision quicker, have a higher degree of confidence in your scientific
decision making. So, it won't necessarily make it cheaper, but it will make it more value creating
because those are the magic moments in drug discovery. It's an intuitive breakthrough that you
validate it, proving that something works. So, it's a lot around decision support. And then I think
if you come into the rest of the business, like many companies. I don't know you will end up
with AI bots looking at your financial accounts, your press release, your admin, your contracts,
and there you will just try and industrialize white collar work and augment it digitally and that
will drive up speed, drive down cost. But I think that's a journey that all businesses, yours,
including, I would imagine would go through and those sort of things. And then the last bit for
us actually scientifically it bridges from manufacturing into the labs, it's around automation.
How do you try and link various machines together so that you don't have that human
intervention and therefore you can go a little bit quicker with certainty, and we do that sort of
thing every day at sort of a business as usual task to see how we can try and automate various
processes within the business.

Bharat Sheth: I have one question for Deepak. Sir, in initial remark we said that we take the hedging for the 12
months. Is it fair understanding the rolling 12 months or for our financial year only?

Deepak Jain: No, we are just talking about the financial year.
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January 23, 2025

Bharat Sheth: Again, say next hedging will be at little higher rate than what we already have, correct?

Deepak Jain: Hedging or financial year.

Jonathan Hunt: Do you hedge one for 12 months or do you hedge every day for a rolling forward view of 12
months?

Deepak Jain: We do a rolling forward view hedging. I thought your question was around financial.

Jonathan Hunt: Just let me summarize. No confusion that we caused. Hedging forward view 12 months, but
rolling. So, we updated in real time. Forward book goes 12 months.

Moderator: We will take our next question from the line of Neha Manpuria from Bank of America. Please
go ahead.

Neha Manpuria: Jonathan, based on your comments that there is a structural need by innovators to look at
alternate location to China. Is there any investment you think we need to make the increase in
the commercial footprint in order to get that business with the competitive dynamics changing
globally?

Jonathan Hunt: I think we have done quite a bit of that. So, if you look two levels either on a capacity level now
go back to the earlier discussions were asking me about when is Unit-III Stelis coming on line.
That's just making sure we have got the capacity headroom in place to enable future growth
because we were running out of capacity. And on the commercial piece, I assume the earlier
question about what's the latest headcount was digging into this. The 14% if I got the right, 14%
increase in the salary bill, some of that is going into new capabilities and some of that will be in
commercial, our sales force structurally over recent years. We now have more of the staff living
in the West, close to clients, and I think that's advantageous for us. Net-net it's more expensive
on a per person basis, but they spend less time travelling to the US because they live there already
and they're much closer to their customers that gives them more selling days in a year and often
it gives them the opportunity to build closer relationships. So, I think we have done some of that
already.

Neha Manpuria: Would this addition be more in the recent years, I understand you would have been obviously
investing this but has that focus increased, that investment increased let's say in the last few
quarters with this entire noise around Biosecure, etc., whether it happens or not?

Jonathan Hunt: No, no, again, you're going to take me back to where you said that entire noise about the
Biosecure. I tried really hard at the beginning of the call to say it's more structural than the
Biosecure. It started over the last 24 months and certainly was in place over the last year. You
can see that in our margins and our costs. But it's good, it's the right thing to do, if we want more,
connect more face time with customers, we have got to be prepared to invest in it.
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January 23, 2025

Neha Manpuria: And just an extension to that question. Some of our peers have argued that it's an advantage to
have let's say manufacturing or R&D facilities closer to customers. Would that be a direction
that you could think at from a capital allocation perspective in the next few years or that's
something that you think the way we have structured now with capacities in India makes more
sense for Syngene?

Jonathan Hunt: Good question. I am going to give you a strategic answer, but as long as you promise not to
misinterpret it because I would never comment on M&A, I've never known any exec say, “Oh
yes.” Let me tell you about the secret thing that we are working on it. Don't misinterpret that. I
think there are elements where if you can get unique talents that you can't get in one geography
of the world that are in another and that doesn't necessarily mean Europe, I can't get this in Japan,
so I buy it in Europe, I can't get in Europe, so I buy it in the US. That would be the one
strategically sensible reason. The other one, if there were particular requirements from a
customer point of view and you know this if you look across the pharma industry particularly
on innovative drugs customers historically are much more comfortable doing drug product final
formulation in region. So, you tend to get more of the drug product made in the US for
consumption in the US, you get drug product made in Europe for consumption in Europe. Once
you go back to API, so drug substance, then into intermediates, RSMs and KSMs, people are
less concerned around where it's made as long as it's made to quality and standard and cost and
you can see that, I mean the whole Indian generics industry and the Indian API industry has been
founded and has benefit on that, India tends to do well on KSMs, RSMs, intermediates into some
drug substance, but most of the drug products in the world is made in the regions where it's
consumed, whether it's Japan or in Europe or in the US. So, you can get. I think there are good
reasons why sometimes you'd want to be in one region. Equally, don't miss. There are a lot of
Western companies at the moment thinking I wish I wasn't in the West; I wish I was in Asia.
India looks good. Large population, supply of talent, labour cost arbitrage, good knowledge
around chemistry and science in general. So, I think our industry group whether it's Syngene or
my peers here in India are also benefitting. Sometimes it's good to be in a particular region. Does
that help you?

Neha Manpuria: Yes, that's helpful. Our Baxter dedicated service contract was supposed to expire in 2024 So, is
that renewed, is it up for renewal, any update on that?

Jonathan Hunt: I just would never comment at an individual client level. We have a good relationship with
Baxter and I know we have done good work for them over recent years, but there's an element
of proprietoriness for each individual client about not commenting on what they do and don't
do.

Moderator: We will take our next question from the line of Kunal Dhamesha from Macquarie. Please go
ahead.
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January 23, 2025

Kunal Dhamesha: First question is on the momentum of RFPs which used to be quite high at least in the first half
of the year while you're seeing some conversion, or we will see some conversion of those RFP.
But how is the RFP momentum behaved in Q3 for us and let's say at the start of the year?

Jonathan Hunt: Good question. I will tell you what's going through my mind. When I answered that earlier in
the year, I said let me give you a point of color because somebody asked me a question, but
please don't expect us to report on this like a statutory reporting item from now on and you all
promise me that you wouldn't do that. So, no real change, particularly, I am trying to get away
from, it's a leading indicator, it was meant to give you a sense that there are people that are
looking to rebalance their supply chains, whether it's from China or ever or coming out of the
US because of the Inflation Reduction Act and we are out there in front of the client. I'd go back
to our revenue. 3rd Quarter was up 11%. That's after two quarters of decline, minus 2, minus 2.
We called it that we would return to growth in the second half of the year, took a little bit longer
than I expected, largely around the stabilization in the biotech market, after that it's business as
usual.

Kunal Dhamesha: But would it be fair to say that the RFP momentum that we saw in the first half has continued in
Q3 or is there some change? And a related question is after let's say a probable delay in US
Biosecure, have you seen any change in the competitive intensity or strategy of our competitors
with their forecast or maybe -?

Jonathan Hunt: So, let me say a bit about the second one, although I am in danger of repeating the conversation
we had at the beginning of the call. It's a perspective. I am sharing my view. Biosecure, if you're
using a shorthand for global restructuring of supply chains, patent expiries in the US the Inflation
Reduction Act impact, risk management in a geopolitical world, learnings from COVID, and
balancing supply chain, so you have resilience, if you club all of those things together. I think
it's more structural than one piece of legislation. The Biosecure Act was crafted, directed at five
companies. And I've been consistent throughout the year. I am not hung up on the Biosecure Act.
I am just looking at my clients, think about how they manage risk and resilience in their
organization and they have been doing it for one or two or three years. So, I think that's real and
I think that'll play out over multiple years. You're getting that?

Kunal Dhamesha: Yes, yes, yes. And then one more of a business-related question. Since we are right now at the
CRO end of activities, we do manufacture but still primarily we are levered to the CRO end of
activity versus CMO. In your client set, what's the kind of churn that you see over a five-year
period, let's say maybe you know the number of clients that you have right now, how many were
five years back?

Jonathan Hunt: Good question and somebody's going to get me the number, I don't have it on hand, but
intuitively I will give you a gut feel. Not a lot of churns, it's very good and I can get that just
through the lens of. I meet the same customers multiple times over five years, the same people,
the same faces. The only thing I would say about your characterization of the company, it's 60:40
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January 23, 2025

split now, 60% of the revenue would be research, 40% would be development and
manufacturing, so CDMO, not pure manufacturing, but it's less pronounced towards research
than you might have appreciated, it's about 60:40.

Moderator: Ladies and gentlemen, we will take that as the last question for today. I now hand the conference
over to Ms. Nandini Agarwal for closing comments. Over to you.

Nandini Agarwal: Well, thank you everybody for joining the call. If you have any further questions, you can get in
touch with IR Team. Thanks, and have a good day.

Moderator: On behalf of Syngene International Limited, that concludes this conference. Thank you for
joining us and you may now disconnect your lines.