Help us understand what exactly went by in Q4 and what is the outlook for FY22?
The fourth quarter was good for us and we are pretty happy with our performance. In the beginning of the year, it was challenging for everybody as India went into lockdown and we suspended operations for a couple of weeks. We then got back to work pretty quickly and predicted that second, third, and four quarters would see a sequential strengthening of the business performance and it happened that way exactly. Revenue was up 13% in Q4. Discovery, development, dedicated centres and manufacturing businesses are all contributing to the growth.
The highlight for the quarter was the extension of the long-term research alliance with BMS for another 10 years. It will include 40% increase in the number of scientists and the addition of a new 50,000 sq.-ft. dedicated lab space.
What are the areas of investment for the guided capex of $100-120 odd million for FY22?
Jonathan Hunt: It will involve quite a bit of the BMS capex. That of course is risk free for us and that is underpinned by a contract that is already agreed and signed. It is quite a big year ahead in terms of investment. Some of that is catch-up from the previous year. Last year, we held off a lot of things that were not time sensitive. Given the pandemic, we made sure that we were thinking very prudently about cash preservation and managing the balance sheet effectively.
So it is a little bit of a catch-up and the rest of it is investment in the future growth of the company. PMS is a good example but I can see investments in each bit of the business — be it discovery services for new capabilities, the new R&D centre that we opened in Hyderabad a year ago. We look to invest further in that and expand discovery services a little bit.
What is the update when it comes to the commercialisation efforts at your newly commissioned Mangalore facility?
These things take quite a number of years to go through all of the sequential steps. It took us three or four years to build the plan. We have now got it to regulatory standard. It has been inspected by the Indian regulators and is now GMP certified
Operationally we are doing work there. We have got to build that business. We have captured that in the guidance we have given for the year ahead but the big inflection point comes once we have achieved regulatory inspection for key regulated markets like the US with the FDA, Europe with the EMA and Japan with the MHLW.
That is a two-year regulatory pathway for us. So between now and then, we will engage with clients. We will be building some book of business there but the inflection point comes once you have triggered those key regulatory inspections and that would come about two years from now. So that becomes the priority.
What has been the impact of the second wave of Covid on business?
It is clearly a challenging situation for everybody on ground in India at the moment. If I look specifically at
, I would point to a number of things; firstly we are an essential service and we have got the contribution to make both scientifically against all diseases, but specifically around Covid and we are doing what we can. We operated pretty much at normal levels throughout the vast majority of last year, once we put in good Covid controls.
I have got about a third of the organisation working from home. They have really adapted to that. Our scientists are very used to wearing PPE and masks and glasses and gloves because they do that in their normal job anyway and so we have had pretty good compliance around that.
We have decompressed our campuses in the sense of the density of people and moved to shift working so we are running at about 30-35% of the normal density and that really helps with social distancing. The other two things I would point to maybe are a little more unique to Syngene. We have our own PCR testing centre, we test and support the Indian government and the local communities but that allows us to give every member of the staff a PCR test every week and that allows us to identify cases very early. I think that is a good way of keeping everybody feeling safe and secure.
The last point is we have just been qualified as a vaccination centre. Again that is unusual for corporates in the Indian context and all the over-45 staff members have been offered vaccination and come May 1, we will start offering that to all employees. All those measures together mean that we can operate even in a lockdown. So far, we have been able to operate at pretty much normal levels but it is such a fluid situation that we will have to watch it on a week by week basis.
