ANTHEM — earnings call

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Prepared remarks

Moderator · Conference Operator

MR. SAION MUKHERJEE – NOMURA Anthem Biosciences Limited August 14, 2025

Ladies and gentlemen, good day and welcome to Anthem Biosciences Limited Q1 FY26

Sorry to interrupt, sir.

Your voice is a little muffled.

I request you to come a little closer, please.

Ajay Bhardwaj

Okay.

Is it better now?

Moderator · Conference Operator

Yes, sir.

This is perfect.

Please go ahead.

Ajay Bhardwaj

Okay.

So, should I start again?

Moderator · Conference Operator

Yes, sir.

Ajay Bhardwaj

Just for everybody's information, we have kicked off FY26 with a strong performance, laying a solid foundation for the year ahead.

The strong year-on-year growth in this quarter FY26 reflects our CRDM or revenue stream that started ramping up in Q2 of FY25. So, all this has been possible because of our dedicated team, strategic focus, and operational excellence and long- standing client partnerships.

And I think we are very pleased with the results of the quarter.

And just to give you an overall sense of what the numbers were like, so our consolidated revenue for the operation was INR540 crores for the quarter.

The CRDM business delivered INR452.7 crores revenues out of that.

And our speciality ingredients was INR87.5 crores.

The EBITDA was INR214.3 crores with the margins, EBITDA margins at 38%.

PAT, which is the profit after tax, was 135.8 million with PAT margins at 24%.

Our net cash position as of June 30th, 2025 is INR784.8 crores, nearly Anthem Biosciences Limited August 14, 2025 INR750 crores of cash in the company.

I now hand it over to the moderator for Q&A.

So, please feel free to ask us questions.

Moderator · Conference Operator

Thank you very much, sir.

We will now begin the question and answer session.

First question is from the line of Ankush Mahajan from Centrum Wealth.

Please go ahead.

Ankush Mahajan: · Thank you, sir.

Sir, congrats for a good set of numbers.

My question is related to the capacity.

Currently, sir, we have a total, in customs and phases, our capacity is 270 kiloliter.

We have a plan to increase it, incremental capacity in this segment is 1,155 kiloliter.

We are increasing it.

Can you give us a sense, sir, what kind of this further capacity coming up in upcoming quarters?

And second point in terms of fermentation capacity, currently we have a 142 kiloliter and how much incremental is coming and will add to the system?

Okay.

So, last one is from my side.

What is the capacity utilization in custom synthesis in the last quarter and fermentation segment?

And can we say that these peptides, what we are talking about peptides, that will come under the fermentation capacity?

Thank you, sir.

Moderator · Conference Operator

Thank you.

Next question is from the line of Vivek Agrawal from Citigroup.

Please go ahead.

Vivek Agrawal: · Yeah. Thanks for the question. Just one question on the quarterly performance. So, though the

Yeah.

Thanks for the question.

Just one question on the quarterly performance.

So, though the Y-o-Y growth is strong, but also on the low base.

If you look at it on the quarter-on-quarter basis, so the growth is strong 15%, right?

And this is a bit unusual given the fact that customers Anthem Biosciences Limited August 14, 2025 stock inventory into the March quarter.

So, what has helped you in bucking the trend?

Is it that existing products where you got an additional wallet share kind of stuff or any new product that have kicked in?

If you can throw some light.

Ajay Bhardwaj

See, the bump that we got in the last quarter largely was of more revenue from our commercial products.

And that has actually – and it's happened across the board.

So, its not one product, as you know, we have a number of products which are commercial with our partners are selling these globally.

And we got a nice bump in terms of sales in the last quarter because of the increased demand from these customers.

So, that was the reason.

But again, I would like to say that this definitely was an exceptional quarter.

It's not that one can expect every quarter to be like this.

The nature of our business is lumpiness.

There will be good quarters and some exceptional quarters.

So, I would like to let everybody know that this is – definitely we benefited from uptake in our commercial products with customers across the board.

Vivek Agrawal: · Yeah. Thanks for the question. Just one question on the quarterly performance. So, though the

Understood.

Thanks.

And although you highlighted that it is an exceptional quarter, but how to look at the full year numbers, right?

Is there any change in the outlook compared to what you highlighted in the past?

Or is it like more or less a status quo?

You would like to wait and watch for the coming quarter?

Thanks.

Just one more question.

If you look at the gross margins, there's a dip on a quarter-on- quarter basis.

So, is it because of the mix or anything else that has resulted in the lower margins?

Yeah.

But the gross margins, right?

So, the gross margins are lower significantly on a quarter- on-quarter basis.

I'm talking about that.

I don't think that will have an impact of ESOP charges.

Yes, yes.

I will join back with you.

That's from my side from now.

Moderator · Conference Operator

Thank you.

Next question is from the line of Bansi Desai from J.P.

Morgan.

Please go ahead.

Bansi Desai

Yeah.

Hi.

Thanks for taking my question and congratulations on good set of numbers.

The first question is more broader one.

This is regarding generally the pricing environment, given the recent developments around MFN policy, the political rhetoric around drug pricing.

How do you see all of that translate into pricing pressure for CDMO companies and the negotiations that you are probably having with your innovator clients?

Ajay Bhardwaj

Bansi, thanks for the question.

See, we are in an environment which is very uncertain politically.

So, what is true today may not be true tomorrow.

But what we are finding is that there is, everybody is operating in an environment of uncertainty.

So, in the past, also, we have had these instances where there was uncertainty.

I mean, we look back at our track record of 20 years now, nearly.

There were financial crisis in 2008, then there was COVID.

We were able to navigate all those uncertainties, by being adaptive to what is happening in the environment around us.

I do not see that this will affect, that should change even now.

Should there be policies which are adverse, which we do not, nobody can predict.

I think, first of all, it will affect everybody equally and Anthem should be able to navigate as it has done in the past successfully.

We are not hearing any negotiation on pricing pressure from our customers other than the normal, what they say that when volumes go up, people want to discuss pricing.

But there is no undue pressure on pricing that we are seeing from our customers at all.

Bansi Desai

That is clear, sir.

And secondly, just on the gross margin bit, we were in the process of backward integrating, one of our key molecules.

If you can shed some light on where are we on that process and have you started to see benefits of that in Q1 quarter?

Moderator · Conference Operator

Thank you.

Next question is from the line of Devanjan Bhakta from Universal General Insurance.

Please go ahead.

Devanjan Bhakta

Yes, hello.

Congress on the good set of numbers.

I wanted to just understand, like, do we have capacity in monoclonal antibodies, like bioreactors and stuff or is it going to be fulfilled by the fermentation capacity?

Ajay Bhardwaj

Yes, so we as we say, we have disclosed that we have large fermentation capacity.

We are right now in the labs, monoclonal antibody research going on for our customers, but do we have a commercial setup for that at the moment?

No. But we are always driven by the needs of our clients and going forward as our projects unfold and they move toward commercialization, Anthem will definitely look at adding antibody production capacity.

And at this moment, we have a number of products, projects in this space, where we will be doing what is called cell-based manufacturers.

So at the moment, we are definitely very, very plugged into this research, but at the moment, we do not have any commercial products which are monoclonal antibodies.

Devanjan Bhakta

Okay.

Thank you.

That's the only question I had.

Moderator · Conference Operator

Thank you.

Next question is from the line of Amey from JM Financial.

Please go ahead.

Amey

Yes, thank you for taking my question.

I have one question on the modality front.

So from the RHPs, we understood we have exposure to ADCs, RNA products, projects, etcetera.

So is it possible for management to give some color on these new modality front?

Because at present, we have good exposure to small molecules, but how we can see some of these new modalities start contributing on the commercial side of the revenue?

Moderator · Conference Operator

Thank you.

Next question is from the line of Harpreet Kaur from Samar Wealth Advisors.

Please go ahead.

Harpreet Kaur

Hi, good afternoon, everyone.

So I just wanted to ask, what is the expected amount of capex in unit 3 and unit 4 in the coming years in number wise, I mean?

Moderator · Conference Operator

Thank you.

Before we move to the next question, a reminder to the participants to ask a question, you may press star and one.

Next question is from the line of Sajal Kapoor from Antifragile Thinking.

Please go ahead.

Sajal Kapoor

Yes.

Thanks for taking my question.

Hi, Ajay, would you rather wait for innovators to award the contract before expanding capacity or build capacity now and be ready to welcome them?

In your view, where is the line between necessary caution and missed opportunity?

Ajay Bhardwaj

Very good question, Mr. Kapoor.

The -- see, we have always expanded ahead of the curve and that's the nature of this business.

You have to anticipate your customer's needs and you've got to add those new modalities.

So you have to operate at the edge of technology development as well.

So totally, as Gawir has already said, we have at the moment 70% capacity utilization and yet we're adding capacity.

What we see is from our clients' futuristic projections on what they think the molecules that we are working on, which direction they will go.

Anticipating that, we make investments in capacity expansion.

So, clearly, we have -- so far in the past not missed opportunities, because we didn't have capacities.

That has never been the case.

And I don't expect that to be the case in the future as well.

At the same time, development -- success of the product under development is not guaranteed.

There is where Anthem has its own product line, which are our specialty ingredients.

And we are able to utilize our capacities efficiently in -- while products are being approved by our clients.

Anthem Biosciences Limited August 14, 2025 So that's -- the whole basis of this model, which was an innovative model that we designed is this, that while our projects move along the pipeline towards commercialization, these are our clients' projects.

As we get approvals, which also take time, we will be able to use our capacities to fill in with our own products.

I think that -- we see that -- we always ahead -- invest ahead of time so that we are never found wanting in terms of capacity.

Sajal Kapoor

Thanks for the detailed response, Ajay.

That was very thoughtful.

My second question is, what are Anthem's top weaknesses today, if any, and how you wish to address them?

Ajay Bhardwaj

That's a very tricky question and it goes down to almost very fundamental question.

We do our -- look at what our strengths are, weaknesses are always harder to identify.

But at the moment, as we see it, the most uncertainty comes from the -- from what's happening geopolitically.

In terms of our strengths, we are very strong in terms of developing new technologies.

We are operating always at the cusp of technology development.

We are arguably the only company which is doing chemistry, using a lot of biology.

And we are operating at a lot of interdisciplinary fields.

So that's what our clients like and that's where we will keep pushing the agenda.

I don't see that we will again be slipping up on technology.

So the whole basis of Anthem is right from the beginning has been, how can we push the boundary on technology development?

And since you've asked this question, we've answered this before also in our, when we were doing our roadshows, we will operate at the cusp of disciplines.

So the marriage of chemistry and biology, the marriage of manufacturing with -- continuous manufacturing with batch manufacturing, automation to a degree that allows us to be most competitive.

So this is Anthem's forte and we will continue to make investments in this direction.

Sajal Kapoor

No. That's helpful, Ajay.

And just as a comment, before I step down and hand it over to the next participant, I interact with a lot of industry players in the CDMO space.

And one or two guys that I regard highly in this space, I asked, how do you rate Anthem in terms of capabilities, ethics, compliance, etcetera.

And both of them praised Anthem very highly.

So keep up the good work and wish you guys all the very best and hope to meet you at some point in Bangalore.

Ajay Bhardwaj

Thank you.

Thank you.

That's very encouraging.

At the same time, we don't sit on our laurels.

We want to keep pushing the boundary in terms of both being more and more compliant because that environment is changing rapidly.

And secondly, pushing again towards new directions in technology development, because, see, there's a lot happening in technology out there and Anthem has a front row seat in drug development.

And I say that very emphatically.

We know what the thinking of drug developers is and what do they need and anticipating their need is Anthem's forte and we'll keep doing that.

Thank you.

Sajal Kapoor

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services.

Please proceed.

Tushar Manudhane

Thanks for the opportunity.

Am I audible?

Anthem Biosciences Limited August 14, 2025

Ajay Bhardwaj

Yes.

You're audible.

Tushar Manudhane

Sir, just if you could share the revenue composition, geography wise, like US, Europe and/or if not, then what was the constant currency growth for the quarter?

Gawir Baig

See, 15% of our revenues comes from exports, from domestic, which is largely speciality ingredients.

And within CRDMO, it's largely Europe, which constitutes close to about 55% to 60% of the CRDMO business, followed by Europe, about 40 odd percentage.

Hardly any revenues coming from ROW markets or Europe markets.

Or ROW markets or India markets on CRDMO.

Tushar Manudhane

So constant currency or how to look at it, like, would it be possible to share on currency growth or the volume growth?

Gawir Baig

So I can share the FX gain that has been recognized in this quarter.

Within the other income, that's roughly about INR3 crores.

Tushar Manudhane

Got it.

And sir, within CRDMO, would it be possible to break the revenue of CRO and CMO and respective gross profit margins?

Gawir Baig

Not on the gross profit margins, but the split of R&D -- within CRDMO, R&D revenues is about INR50 odd crores, and the development and manufacturing revenues is about INR400 odd crores.

So which is the split between the INR450 crores of CRDMO revenues that we have.

Tushar Manudhane

I meant to ask this development and manufacturing.

So again, there is a further two buckets, right?

The development related business…

Gawir Baig

Yes.

Tushar Manudhane

And manufacturing related business.

Gawir Baig

See, development and commercial manufacturing, more or less in line with what we have reported in March ‘25.

So the percentages are broadly the same across FY ‘25, as well as in Q1 FY ‘26.

Tushar Manudhane

Got it.

And just lastly, from my side, as you pick up these new sort of technologies, ADCs or peptides, just your thought process in terms of the profitability or the return ratios on these aspects or let's say the timeline to achieve that, any broad contours or framework, is it in line with what we have of the existing business or you think that this is going to take lesser time or longer time, whichever way?

Moderator · Conference Operator

Thank you.

Next question is from the line of Amlan Jyoti Das from Nomura.

Please go ahead.

Sorry to interrupt.

Your voice is breaking.

Your voice is not clear.

Amlan Jyoti Das

Yeah.

Hello, sir.

Congratulations on a good set of numbers.

I just have a question on the margin front.

So how do you see the EBITDA and gross margins going forward in this year and the coming couple of years?

Moderator · Conference Operator

Thank you.

Next question is from the line of Jash Gandhi from Dalal & Broacha.

Please proceed.

Jash Gandhi

Yeah.

Hi, sir.

Thank you for the opportunity and congrats for the great results.

Sir, just one question on the two commercialized molecules that you highlighted that have been approved now.

So which therapeutic areas do they belong to and are they for biotech, or are they for big pharma?

That's it.

Thank you.

Moderator · Conference Operator

Thank you.

Next question is from the line of Saion Mukherjee from Nomura.

Please proceed.

Saion Mukherjee

Yeah, so thanks for taking my question.

Sir, I think you mentioned about discussion with the customers on pricing with all this, noise on tariff, et cetera.

I'm wondering, two questions here.

One is, is there any discussion in the recent past regarding setting up facility in the US?

Given that dynamics, do you see that a possibility sometime in the future?

And then let's say tomorrow there is a tariff imposed, whatever that number is, how will that impact our business?

Will we be able to pass on any impact on day 1?

How the dynamics would work out in such an eventuality, if you can, take us through that?

Ajay Bhardwaj

Okay.

Your second question first, the impact on tariffs.

See, we are dealing with global companies and we could be working, very often it happens that the company you're working for might be a European company, but the product is being taken by them in the US and or a US company which buys the product in Europe, in their facilities in Europe.

So, I think you have seen a large part of our sales do go to Europe.

So, from there it is formulated and then distributed globally by the big pharma.

So, only the part that goes into America might be tariffed and that is the end product.

We are supplying the active or the advanced intermediate.

So, will these qualify as pharma itself is sometimes, a question mark, because some of the products when they are under development, they are still chemicals and not drugs.

So, this is all a bit murky as to how tariffs will affect some of the, definitely the development and the other thing.

And as these companies will probably adapt if there is a very heavy tariff put on pharma, most of our products can go to Europe as well.

And from there, they are distributed to the US.

So, again, we will not be directly impacted.

As far as putting up a facility in US, I mean, that is a very long term process.

Just think about it.

First, you set up a facility that itself, it takes much longer in a developed country than it would take here in India.

Secondly, then you have to wait for approvals.

Then all that the whole cycle is maybe 7 to 8 year cycle.

And that is where I think there is a huge disincentive to go and set up a facility there for most people.

And, if somebody can say, well you can acquire a facility.

Well, the cost of acquisition is so onerous that it may not be even commercially viable.

So, taking all that into account, I do not think that is something that is on the cards.

But of course, as we said, if there is a right type of candidate available for acquisition, Anthem is open to that.

And we are always looking to see if we can grow in organically.

Saion Mukherjee

Okay.

And then the second question would be, you mentioned about new technology frontier and how things are sort of changing at a fast pace.

In this backdrop, what would be the potential bottleneck as you try to keep pace?

Will it be possible to organically build those capabilities on Anthem Biosciences Limited August 14, 2025 time or you would require to look at acquisition to sort of, manage this fast changes in technology?

Ajay Bhardwaj

See, again, when you are saying, when we are talking about fast changes in technology, then when the new technologies are emerging, there are hardly any historical players that you can acquire because it is so new that there is nobody doing that at that moment.

So, mostly it does require building up capabilities from the ground up.

And that is what Anthem has been really good at.

However, when you say to talk about new modalities, which have been around for some time, and there could be an acquisition target, then Anthem will look at that.

Saion Mukherjee

Okay.

Gawir, is it possible to just this INR450 crores CRDMO revenues in terms of, customer concentration, big pharma versus emerging pharma split or, yes, I mean, that kind of a split or concentration of the product, if you can give some color, customer and product concentration in this revenue base?

Gawir Baig

It is in line with what we have witnessed in March 25 from a percentage level.

Our commercial portfolio is similar.

And if you look at the commercial portfolio, it is largely coming in from the big companies.

The development portfolio as a percentage of revenues have been the same as in Q1 FY '26 as what it was in FY '25.

And that comes from the emerging biotech space.

So broadly, the color of the business across on the CRDMO and the split has broadly has been the same, maybe marginal one or two percentage here and there, but broadly, the directionally, the numbers are the same percentage wise.

Saion Mukherjee

Okay.

Thank you.

Moderator · Conference Operator

Thank you.

Next follow up question is from the line of Bansi Desai from JP Morgan.

Please proceed.

Bansi Desai

Hi, thanks for taking my question again.

So firstly, just on this commercial portfolio that we have, how should we think about the growth outlook here?

So is it going to track the end molecule sales, largely speaking, or is there a possibility for us to do better?

The reason why I'm asking is that we probably are primary source supplier on a lot of these large products that we have.

So is there scope for us to see increased wallet share, or even forward integrate in some of these products?

Gawir Baig

See, Bansi, I mean, if you look at the relationships that we have with our large customers and for whom we supply commercial molecules, over the time since we've been engaged with them, we have been deepening our relationship, our engagement with them have been pretty high.

And we keep on discussing with them on a weekly basis in terms of what else could be done or what are other projects as well.

So from a customer engagement point of view, what we are doing is we're doing things in the right direction, hopefully, that can add on to the wallet share.

But I don't want to make any comment futuristic in nature, which could say that, we will increase on wallet share.

But broadly, the customer growth and molecule growth is what we would Anthem Biosciences Limited August 14, 2025 actually mirror from a supply chain point of view.

By keeping our wallet share intact is what I would rather say.

Bansi Desai

Understood.

And secondly, next year we have GLP-1 going off patent in multiple markets.

We now have peptide capacity also, which is commissioned.

Is this going to be an exciting, growth driver for specialty ingredients, if we say, over the next 2, 3 years?

Ajay Bhardwaj

Yes, I mean, as we said, told everybody before, we are definitely participating in the GLP-1 space.

And we have a number of customers whom we are, a number of pharma companies whom we are talking about, we are supplied samples to, and we are in very active conversation on developing this.

Yes.

So going forward, Anthem will be a player, a serious player in GLP-1.

Because it is a, this is, it is not a me-too type of product.

And we believe that our competitive strengths will allow us to be one of the, I would say, the leading producers of GLP-1.

Surely.

Bansi Desai

And we will be able to compete with Chinese competitors as well?

Ajay Bhardwaj

Absolutely.

I mean, if you can't, then you're not in the business.

Bansi Desai

Understood.

That's great.

Moderator · Conference Operator

Thank you.

Next follow-up question is from the line of Amey from JM Financial.

Please go ahead.

Amey

Yes, thank you so much for giving opportunity again.

I have one question on the BD team side.

So most of our Indian companies, even the foreign peers do have a conscious presence of BD teams.

However, we have been largely now at least working from India.

So going ahead, do you have any thought process of putting up BD team in these locations like Europe, etcetera, or we will continue to work from India?

Ajay Bhardwaj

So in terms of business development, I think our growth and our performance speaks for the fact that our BD approach has worked really well up till now.

Again, we're not adverse to putting feet on the ground in those geographies, but there has to be a very compelling reason.

And at the moment, we don't see a compelling reason, we're able to manage all of it from here, as well as wherever required need based we will have people to support us.

But in terms of our US BD, that is very well established.

And we are working with our partners over there.

And it's worked so well for the last 19 years that it doesn't give us any reason to want to change that.

So I think that question has been answered a long time back.

And we are able to manage it.

See, otherwise, you would see that our cost of BD will escalate very, very significantly, if we were to start looking and putting our own BD on the ground in these countries.

So I think we'll be we'll continue to do what we've been doing up till now.

Amey

Sure.

And the second question I have on the CRO part of the business, at present it remains one of the minority segments.

Going ahead, you have any thought process of developing the CRO Anthem Biosciences Limited August 14, 2025 part of the business?

Also, we are largely FFS focused player.

Once you scale in the CRO, you think that the FFS contract mix would remain that high?

Moderator · Conference Operator

Thank you.

Next question is from the line of Devanjan Bhakta from Universal Sompo General Insurance.

Please go ahead.

Devanjan Bhakta

Yes, thanks for the follow up.

Like I wanted to get the split between the customer types like revenue split, like how much percentage is coming from originators and how much of it is coming from generic companies?

Moderator · Conference Operator

Thank you.

Next follow up question is from the line of Amlan Jyoti Das from Nomura.

Please proceed.

Amlan Jyoti Das

Yes, hi sir.

Thanks for the follow up.

So my question is regarding the ADC space.

So I just wanted to understand what capabilities do you have right now in the ADC space?

Are you also looking for conjugation capabilities and one more?

So you had one latest project in the ADC space.

So just wanted to understand what is the stage of the product right now?

Moderator · Conference Operator

Thank you.

As there are no further questions from the participants, I would now like to hand the conference over to Anthem Management for the closing comments.

Thank you, sir.

On behalf of Anthem Biosciences Limited and Nomura, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.