Business Profile of the Anthem Biosciences Limited

Anthem Biosciences is a Contract Research and Innovation Service Provider (CRISP) based in Bangalore, India, with a capacity to house over 1000 researchers and manufacture novel commercial drug actives. Since 2007, Anthem has become a powerhouse for drug and new product development and manufacture, focusing on biological and chemistry-based products and services. The company's labs have helped biotechs and big pharma develop, optimize, and test proteins, monoclonal antibodies, peptides, large molecules, small molecules, toxins, and more.

Anthem also helps test drugs for safety, efficacy, pre-clinical animal studies, clone development, antibody drug conjugates, R&D, and manufacture of highly potent compounds. Anthem has leveraged its core competency in organic synthesis to develop new nutritional products with a strong scientific rationale, which are now sold globally to nutraceutical and wellness product companies.

Anthem Biosciences Limited IPO Objective

As per the draft red hearing prospects, the IPO issue consists only of offer for sale.

• The OFS consists of up to XXXX Equity Shares aggregating up to ₹ 33,950.00 million. Nothing from those proceeds of OFS will be allotted to company.

IPO Details of Anthem Biosciences Limited:

Issue Price & Size: Anthem Biosciences Limited IPO

The issue price of Anthem Biosciences Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company only has offer for sale of Rs. 3395 crores.

Launch Date of Anthem Biosciences Limited IPO

The IPO opening date of Anthem Biosciences hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.

Anthem Biosciences Limited Financial Statements

Anthem Biosciences Limited Promoters & Shareholding

As of date, there are four promoters of the company. The promoter in aggregate holds 71.11% of the paid-up share capital of company.

Should You Subscribe to Anthem Biosciences Limited IPO or Not

While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.

Competitive Strengths of Anthem Biosciences Limited:

End to end CRDMO service provider

The company provides a wide range of Comprehensive, Integrated, and Customizable CRDMO services across the NCE and NBE lifecycle. As an end-to-end CRDMO, they offer integrated services and onboard, transfer, and deliver drug technology across various stages of the drug development lifecycle, resulting in reduced lead time and cost efficiencies for customers. They have recorded the highest revenue growth in FY23 to FY24 compared to their peers in India and globally.

The company has completed over 8,000 projects and worked on molecules with various customers at various stages of the drug development lifecycle since inception. They have a diverse mix of 196 Projects in the pipeline, with more than 100 projects in early stages and many projects at various development phases.

Differential business model

As an end-to-end CRDMO partner, they are well-equipped to anticipate and address the problems faced by small and emerging biotech companies. The F&S Report highlights the growing prominence of small pharmaceutical and biotech companies. These emerging companies are characterized by their innovative approaches to drug development and grow faster than large pharmaceutical companies.

Partnership with such small and emerging pharmaceutical companies is sometime necessary and profitable to access necessary expertise and technologies without taking the burden of establishing capabilities in-house. Partnerships with these companies allow Anthem to support from early drug discovery through development and continue serving them even after their acquisition by larger pharmaceutical companies.

Large, diversified & loyal customer base

The company has forged long-standing relationships with several customers, with their top 5 customers collectively accounted for 69.86% and 65.07% of their revenue from operations for the six-month period ended Sep 30, 2024 and FY24. The company serves a diverse range of customers, including emerging biotech companies, small and large pharmaceutical customer with multiple projects and larger R&D budgets, and mid-sized pharmaceutical customers with innovator and generic focus. Over the last three fiscals, the company worked with over 300 customers cumulatively. The top 10 customers have an average length of relationship of 11.60 years and 11.40 years.

Wide specialty ingredients portfolio

The specialty ingredients market includes biosimilars, vitamin K2, probiotics, peptides, industrial enzymes, protease, serratiopeptidase, nutritional actives, and vitamin analogues. The company has the largest fermentation capacity among all assessed Indian CRDMOs and secured two contracts with major pharmaceutical companies for niche probiotics and biosimilars products. The company plans to continue investing in manufacturing capacity to cater to the expected increase in commercialized and late-stage molecules. They have invested in technologically advanced processes and developed arrangements to improve operational efficiencies.

Future strategies

• Leverage technological capabilities across chemistry and biology to attract new and existing customers
• Expand laboratory-scale photo-chemistry and electro-synthesis capabilities
• Leverage its technical expertise and track record to position itself as the CRDMO partner
• Increase technological capabilities and manufacturing capacity
• Obtain relevant cGMP certifications for Unit III upon its completion.
• Unit V 20 acres Hosur, Tamilnadu, earmarked for future expansion post Unit IV.
• Focus on growing complex specialty ingredients business with large market opportunity
• Plans to increase contracts with companies to develop long-term partnerships
• Targeting wider range of companies by focusing on specialized fermentation-based APIs, probiotics, and enzymes
• Improving Cost Management and Operational Efficiencies, including Supply Chain Resilience
• Develop domestic suppliers as preferred partners to reduce dependency on offshore suppliers

Risk Factors of Anthem Biosciences Limited:

Segment concentration

The company provides contract research, development, and manufacturing organization (CRDMO) services to various industries. As can be seen from table below, company's revenue from operations is reliant on customers in the biotech and pharmaceutical industries. The revenue can be affected due to various reasons which could be beyond companies’ control, such as cost pressures, success rates, decreasing budget for development, etc. As of Sep 30, 2024, the company served 132, including 110 small pharmaceutical and emerging biotech companies. The company is assessing its revenue from CRDMO services and its ability to develop a diverse mix of molecules. On exploring deeply in CRDMO segment, companies majority of revenue was generated from development and manufacturing unit. The amount customers spend on the development and manufacture of their products, particularly those outsourced, substantially impacts revenue and profitability.

Developing new technologies

The company is adapting to technological advancements in the global pharmaceutical outsourcing service industry to maintain its competitive edge. The company's R&D services are primarily offered through fee-for-service (FFS) contracts, with revenue recognized when customers control the deliverables. This differs from the FTE model, which charges fees based on time, cost, and number of employees.

If the company fails to meet obligations or exceeds budgets due to competitive pressures, it may not recover costs or receive service fees, leading to significant losses and liabilities. Developing new technologies requires significant capital investment and involves substantial uncertainties. If R&D efforts fail, customers may discontinue their endeavors and adversely affect the business, financial condition, and results of operations.

Client concentration

The company relies heavily on its top 5 and top 10 customers for a significant portion of its revenue. The top 10 customers include three large pharmaceutical companies, with Davos Pharma being the second largest and largest customer in terms of revenue during 6-month period ended Sep 30, 2024 and FY24. The The company also derives a substantial portion of its revenue from developmental and commercial manufacturing, which could be adversely affected by a failure to develop or manufacture commercially viable drugs.

Manufacturing units and strict standards

The company's operations are heavily reliant on its manufacturing facilities, including Units I and II in Bommassandra, Unit II in Harohalli, and Unit III in Harohalli. As of September 30, 2024, the company has three manufacturing facilities in Bengaluru, Karnataka. All current manufacturing facilities are located in same geographic, hence create a sense of geographic risk. The geographic concentration of these facilities increases exposure to adverse developments in the region. Upcoming Unit III facility set to be completed by the first half of 2025 is also under same geography. Any disruption, breakdown, or shutdown of these facilities could have a significant adverse effect on the company's business.

Compliance with regulations and quality standards is crucial for obtaining and maintaining approvals from regulatory authorities. Hence, their manufacturing units are subject to periodic inspections and audits by. Failure to pass audits or receiving critical observations from clients could significantly harm their reputation.

Supply chain

Any company competitiveness, costs, and profitability is largely dependent on its ability to maintain a stable supply of key raw materials at reasonable price. As can be seen from table below, the company as per recent data was dependant on imports for meeting its raw material requirement. Companies share of import has significantly increased y-o-y from 22% to 58% as of as for 6-Mon ended Sep 30, 2024. Also, the share of import from China remains significant. Any price increases or interruptions of supply from overseas sources may negatively affect the company's business. Factors beyond the company's control, such as geopolitical conditions, competition, production and transportation costs, foreign exchange rates, taxes, and trade restrictions, also impact the company's profitability. The company has developed alternative domestic suppliers in India to reduce its dependency on offshore suppliers.

Anthem Biosciences Limited Grey Market premium

Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable

However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share

According to various online sources, the Grey Market Premium or GMP of the Anthem Biosciences Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.