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The SOIC Podcast
10 CDMO Businesses Decoded
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CDMO businesses can look similar from the outside, but the real question is: what actually separates a great CDMO from the rest? In this podcast, Ishmohit and Sid will discuss their years of research through the SCALE UP framework, covering stickiness, chemistry, anchor clients, late-stage pipelines, Capex economics, utilisation and price. They will also break down the 6-tier CDMO mental model, industry growth drivers, AI, peptides, China-to-India shifts, regulatory barriers and the lumpiness of CDMO earnings. If you want to understand how to evaluate CDMO businesses before forming a view on individual stocks, this episode is worth your time.
Hi investors, welcome to SOIC. So this session is CDM sector complete primer industry. And this primer with me Sid. So a lot of you might not know Sid because Sid behind the screens usually over the years. Lawrence Labs, Psy Life Sciences, Naveen Florine, DV Laboratories, AcuTARS Chemicals, Altipharmaceuticals, a lot of these CDMO companies which are in the listed space, almost each and every decode. And what we have done is that we've created this entire playlist of CDMO companies on our channel. So Sid and I together have made those videos. Like Sid and I like we have done research together on those videos. So Sid presentation Sidney will like I've given the research. He has also done co-research on them. And today what we'll be doing is that I thought why not bring uh Sid to the camera. And what we'll be doing is that we'll be discussing the entire primer of CDM. Okay, CDM company, TAM as industry. Why is this industry interesting? Markets stocks lumpiness industry, new modalities. And first time ever, we will be giving you our mental model. This can be six tiers of CDMO businesses discussing it. With this, let's drop a welcome to Sid in the comments. So I sit by discussion. Right.
SPEAKER_00Hi Ashmood, thank you for having me once again. And it's always a joy to collaborate with you behind the scenes, like how how we've always been doing. So perfect.
SPEAKER_02So like when we do research on the C DMO industry. Right. So we have CDMO industry. And uh like the world's largest player.
SPEAKER_00Right. Uh now it's a very interesting question. Already Indian companies compare. Because if we look at sales from a global point of view, this industry is close to $171 billion. And those companies are in the Voshi Biologics and Voshi app sale close to $13 billion. Or other Indian space comparison. So I think Indian CDMOs sale collectively would be like around 2% of this size.
SPEAKER_022% of the $171 billion.
SPEAKER_00Right, right. Right.
SPEAKER_02So I think what we were doing is podcasts. Which is equivalent to almost 9 to 10 lakh crores. Right? Right. And the Indian C DMO industry. So Indian C DMO industry market cap to beach. At least Sari C DMOs add because market cap ni banaga. I think DVs had 2 lakh 40,000 crores Loraska 1 lakh crore, Sci Life Science is 30,000 crores, Anthim ka 4050,000 crores, Naveenka, I think of 40, 50,000 crores, okay? Right, AcuTaska, I think 20, 25,000 crores.
SPEAKER_01Exactly.
SPEAKER_02And uh I think one very interesting fact that we were looking at was I think I'll take the technical data and said we'll look at the fundamental data. So CDM stock scans custom scans. So we have companies, Acuta's, SciLi, Enthemia, Novin Florin, DVs Labs, Loris Labs, right? And uh like even RT or CDM, and we made a custom scan out of it. So we have a custom scan. So this custom scan is showing multi-year highs. And actually, we have covered the last five years. Since then, the index itself has gone up by nearly um like 12 to 13 times, right? Right. A lot of companies have done superbly well, like Newland Labs and stuff. But the surprising part is it just still seems to be that we are at the tipping point of the edge which is the sector growth.
SPEAKER_03Right.
SPEAKER_02So what was the fundamental data in the data results?
SPEAKER_00Right. So, other companies pharma CDM scan colours, stock scans, so start starting with DVs, other companies profit after tax growth trailing 12 months, so DVs 26%, and Lauris Labs 116%, and them life sciences 14%, land pharma 46%, Sci Life Sciences 48%, Newland Labs 182%, and so on. So this indication is a blockbuster quarter, especially for the CDMO sector. So it's quite interesting to see just companies growth, and finally inflection and coffee interesting quarter to read their coin calls and get an idea where we are heading in terms of the industry. So trends are prominent, multimodalities side peptides, lipids, oligonucleotides, and um uh antibody drug conjugates. So this is interesting space peptides, which is the same thing. Pass peptides, 110 to 130 drug approvals, FDA passed in the approach. And fast forward to today, development phase 800 drugs. Interesting said. So uh Ishmouth, my question to US overall sector, blockbuster earnings, or inflection, coffee companies, or the first principle reasonable.
SPEAKER_02So basically, pharmaceutical industry. But this is a which involves tech transfers, and you have to take literally an innovator's molecule and scale it up at your own site. But innovators' molecules scale up. So the world trends, we have 2017-2018. But over the years, companies 110 to 120 words mentioned, plus almost 1100 times plus CDMO words was mentioned. So Indian businesses make low cost manufacturing Western innovator companies like Pfizer, Abvi, like Eli Lilly, these companies are transferring more and more molecules to get it manufactured from India. Even the results of 52% growth, and on the guidance with 36 to 40%, but us make dichotomy. Dicot me, you make Nichiagram Jake cheese results, top line growth, but top line growth, uh, so they follow a model of follow the molecule, right? Discovery molecules, uh, commercialization, or manufacturing milk. But wushi growth, basket, molecules blockbuster. But incremental backlog. But incremental backlogs. Not from tomorrow's molecules. So tomorrow's molecules said, but you can see the same thing. And China China can make in China plan either 2025. China said, make me make in China planning. That they want to compete with USA in some of the high-tech manufacturing industries. They say, you know, pass past trend. Right. Uh solar, right? Some of the green energy technologies. China is a world market leader in power equipment. Right? Similarly, biotech in China, China with contract manufacturing, but now China said value chain climbing, innovate trucks. Right. So we can use contract manufacturing.
SPEAKER_00But up job innovate is an innovator shift.
SPEAKER_02Yes, end clients compete. So what is happening is that a lot of these Indian companies have started getting business. And business SIM eight molecule companies trajectory change. Just to give you a small example, acute hours chemicals. I think eight times crore CDM business. This is in 23, 24. Right, acute hours, I think 2028 with more than 1000 crore business CDM. So we are revenues. So growth Indian companies accelerate because of this shift in mindset which Chinese companies have had. And this is not just true for C DMOs, this has also happened in power equipment, also happening in battery chemicals. Battery chemicals may be FEOC norms, battery chemicals are BSS equipment US can be a puraka pura system that cannot be coming from China. You call China grid bunk, right? So this is what is leading to these things, and it is also leading to an act which you can talk about.
SPEAKER_00Uh bias act, right? Right. Right. So imposso nigga or benefit, I think Indian C DM players and basically I think uh acute ass just scale as a molecule. And Joe by choice pattern be witnessed. Or China violate by secure act, and they ended up losing business and actions. Or is it beneficiary for Indian markets?
SPEAKER_02And actually, the thing is China might not have lost business. Right. But who is incremental business Indian companies? Incremental business. So existing business is biosecure. Right. Right. But if you have 50,000 belt to 100%.
SPEAKER_03Right.
SPEAKER_02So it's like a hanging sword.
SPEAKER_03Right.
SPEAKER_02If you collaborate more and more with these companies, acting supply chain, problem. Right? So the fact that the act is there or being discussed is leading to such type of uncertainty in the mind of the innovator.
SPEAKER_03Right. Right.
SPEAKER_02Right? Registration is a supplier change. So this is a very interesting fact. Suppose I go to a Brazilian regulatory agency, I get a drug registered, innovative drug. I want to get it manufactured. Right? So you can go manufacture, like I want to sell it over there. So I sell regulatory approval regulators when a drug is a good idea. Like I'll be marketing it over here under the brand name, this, this, this. So I also have to mention manufacturer. So I think India supplier chain, then I have to go for a complete re-regulatory filing. So it's also that hindrance which gets created. And I think these are the one or two reasons. I think because first I'm China climbing the value chain, then second, I have a biosecure act, it's uncertainty.
SPEAKER_03Right.
SPEAKER_02Third thing, Sid, which is causing this acceleration of shift. I think this is the third and fourth thing in mind. Then we'll go towards the new bad uh new modalities and stuff. The third thing which is causing the shift, Sid, is the advent of AI. It is not causing a shift as per se, but it is accelerating the growth of pharma.
SPEAKER_00Right. It's an enabler.
SPEAKER_02It's an enabler. Yeah. So we may be data, right? So data, it's a very interesting piece of data. Actually, C DMO industry is a very important thing. So, learning 11 years, a good friend, Twitter post. So, AI say drug discovery short. Because of AI enablement, which is a 70% faster thing. Phase 1 success rate, phase 1 success rate is 40 to 65%, so AI molecule is 80 to 90%, which is a 25 to 30% faster. Phase 2 success rate 30 to 45% is 65 to 75, which is a 25 to 30% improvement. Early stage cost baseline is 40 to 60% lower. And overall RD cost $2.6 billion that will be lesser by 25 to 40%. So nearly saving of 0.7 to 1 billion dollars. So programs in clinic, this is the key data point. I can't stress this enough. This was 24 in 2023. But today that number is 173. Just to give you some context, last year 41 molecules were approved by USFDA. Now, if this run rate increases, what do you think happens? Eight molecule company trajectory changed. Right. So TAM exploded this number goes from 41 to let's say 80 to 90, and Indian companies start getting more business, you'll see an increasing number of DVs Lauras getting created in the Indian landscape. Maybe DV's Lauras might be the next DVs Laurence. Right. So this is a very big reason because Sidna, because you and I track the global research landscape. This also gets reflected in the biotechnology index in USA. There are companies like Twist Biosciences, companies like Natera, companies like Unicure, companies like Abivax. These are biotech companies, right, which are sitting at all-time highs today. Because biotech AI enabler cost cutting methods, re-iterate twist bio science is a company. It's a platform, right? It's like the TSMC of biotech. So biotech index time all-time. So it is this sector is also a beneficiary of AI because the molecule commercialization pipeline that is going to explode in the coming three to five years. And this will be the use case of AI. AI meme said you are going to use AI to cure cancer, right? Right. And then yes, we are going to use AI to cure cancer. Right? So actually, AI use, actually, cancer vaccine discussion. There was a company which popped by 155% age in the same day. I think we can have it on the screen. Right? So that is because uh these new discoveries are happening. Human beings will have a better life for the last uh the last generation, and healthcare is one of the industries where this acceleration will be seen. So this is a third big reason which is leading to the growth rate of the CDMO.
SPEAKER_00So it's my coffee interesting Indian players, the fourth reason we observe Jesse Loris Labs. Madlup spend visibility hoog, client front with the thought process global customers. Tabi capacity setup currently, so Jesse Agaram bathkar lawyers key us nap na upgrade capex, one thousand crores or two thousand crores. And uh for similarly Newland Labs could be announced, peptides, capex three forty two crores. So DVs labs care, Tonona be two thousand crores spend karapne, unit three kele, uh expansion. So unko be visibility, GLP GLP drugs, long-term contract secure cars customers and in talks. So that is the kind of size that DVs labs and Loris Labs and all these companies like Newland are looking at. So if if we look at their land banks also, so uh I think DVs Labs are close to 1,000 acres land yoga, maybe more. And Loris Labs also is expanding uh and acquired 500 plus acres. So it's giving us visibility that something that they're looking at the CDMO sector visibility, it has a total addressable market tap and they must be getting signs from the global players. We need more capacities and we want to give you more business. So they they must be having some sort of visibility to leverage this.
SPEAKER_02This is a point of Naveen, which was a very conservative chemical company. So Naveen is CGMP 100, right? So Naveen is in 2010 Manchester Organics and Naveen CGMP 10. Uh like I've been tracking the companies for since 2017 now. Uh Naveen CGMP4, CGMP4 phase two, CMP plant current good manufacturing practices because CGMP1 CGMP is CGMP 4 part 2 KPEX. That is close to 940 to 950 crore rupees plus time CDMO business 40-50 crores. So that's a type of J curve which takes place in this sector. So, they are capital on the ground companies already, and the fourth reason like you wonderfully put, because now Indian companies have also scaled. This is why we are seeing the size of opportunity accelerating in this industry. Now, just before going forward, as a part of SOIC membership, what we do is that we try to cover as many sectors and as many themes as possible. Recently, students live streaming, new age manufacturing sector. Similarly, when you will be watching this video, we have new age consumer and internet sector sectoral analysis. Jump top down sector, and the sector seeking it. What we do at SYC membership, apart from this, that we have a detailed SYC membership, level one members, financial planning, and how to pick mutual funds, and asset allocation. So all these things are part of financial planning. So level two, we learn about all about fundamental analysis, cash flow, balance sheet care, income statement care, ratio analysis, all these things we learn in level two. Level 3 or portfolio allocation framework. Level 4 we learn how to do technical analysis and what are the buying and selling criteria of stocks. Level 5 we teach all about screening stocks, screening, and level 6 may we learn about sectoral analysis. Every 14 days scanner overall sector analysis. There are three added bonuses. Pell added bonus stock scans is a part of SYC. So as a part of being an SYC member, SOYC scans code use stock scans, membership limited time period. That is also included in the SYC membership. And finally, what is the added bonus? Is that when it comes to SYC membership, we have market signals every 14 days? We cover top-down what is happening in the market. SYC market signals is the most interesting part of the SYC membership. To make sure that we are up to date with whatever developments are happening in the Indian economy. If you want to take this challenge of becoming a good investor or challenging yourself of becoming a more informed investor, then SYC membership is for you. You can use the coupon code SYC scans to become a part of the SYC membership. With this, let's go back to the video. That is the question. Right. So this me uh said. Over the years, I've just formulated this acronym. This is TV GP acronym. Scale up. So, scale upon the acronym. Logo simplify. S stands for stickiness of the molecule. Because it buys a supplier regulatory filing name. So stickiness and revenue commercial stage molecules discovery. This is an analyst discovery or development revenue versus commercial secret. Discovery or development may sit here. So, value chain target discovery. Testing for discovery and screening six months to twelve months, therapies, concept molecule concept. Again, medicinal chemistry, drug design, or one to three years. Just bioavailability or absorption medicine. For phase three stage, this can be clinical trials, real human beings. Phase one stage or discovery stage testing in vivo. On a side note, lab monkeys price has exploded recently. Because the demand for their testing has also exploded. And then finally, phase three commercialization stage different agencies, registration of the molecules and finally it goes towards the market. So CDMOT, scale up there, S stands for stickiness of the molecule. Phase 10 phase phase one is development or drug phase two. So for sure, because what if the trial fails? Right? Trial failure. Right, right. So the analyst looked at the same time. Kit commercialized molecules. For example, Newland Labs are BPT. So it's a very good management because they give this data also.
SPEAKER_01Right.
SPEAKER_02Development molecules and supply revenue or commercial molecules.
SPEAKER_00Right.
SPEAKER_02I think over the years of data can be companies in the pipeline, number of molecules pipeline. Right, suppose 10 molecules phase 3. Phase 3 to commercialization, probability of success is higher. So I think tribe community success rate. So if you have CDM phase three molecules, probability of success molecules commercialized higher. So that is one of the ways that it looks like. So scale up the scale. C is chemistry the client cannot do elsewhere. So for example, flow chemistry, hydrogenation, HP APIs, high potency APIs, peptides, oligonucleotides, ADCs, biocatalysts. So new modalities are new chemistries emerge. I think new chemistries I think Sid, you have done good work on this. You can also mention new chemistries.
SPEAKER_00Right. New modalities basically oligonucleotides, antibody drug conjugates, ADCs just coming to the main one, peptides. Just tam both rapidly increase usage-wise.
SPEAKER_02And peptides are the audience simple way. So peptides are rules, explode.
SPEAKER_00So basically, past FDA approved basically new drugs. So past 10 years, 110 to 130 approvals, FDA. Fast forward to today's development phase. Peptides. And interesting cheese GLP one trends. This has gone to another scale. Pass cost challenge, manufacturing costs. That's how manufacturing facilities are risky. But since we have peptides, old Congols, overall Joe, they have first principles to the building blocks, DVs, amino acids. Or similarly, Joe Newland, Urski management peptides, potential holding, or in the near future, so audience question.
SPEAKER_02Your peptides are simplified first principles. What do peptides do?
SPEAKER_00Right. So first principles may break down analogy. Think of it like Lego pieces. But multiple pieces are chain. Those chain peptide bowling. Basically, weight loss runs GLP1 boulder. Sarah celebrities.
SPEAKER_02Basically, human body peptides. And I think we were discussing this before also. Because human body peptides are amino acids long breakdown rapidly. So absorption. So this is why I think peptides are gaining more and more prominence. I think almost $51 billion market discussed. So scale up can the set C stands for chemistry platforms. We discussed, like you explained. So we have modalities with other companies. For example, Newland biotech companies are not going to be able to do that. Silai biotech, big pharmaceutical DVs to come in big pharmacist. So that is important. This scale of Elma said late stage pipeline count. There is new and smedeka, uh phase three molecules bots are commercialization stage molecules. So, I think that's a good idea.
SPEAKER_00Right.
SPEAKER_02That is probably true, but that will take this is why a CDM business takes 10 to 15 years to build. Newland 2008 seeds so we take an example, Sinjin in 2016 is soined manufacturing partners, even after 10 years of spending there, they're still struggling. So it's not an easy business to scale up because we have a lottery ticket. But how other number of molecules are sci life passed 150 plus molecules, DVs is working on tons of molecules, Loras is working on like 60-70 plus projects. So what happens is that Kushna kush is not a good idea.
SPEAKER_00Right, because analyst community question is small molecules.
SPEAKER_02New chemical entities are chemical platforms. This is parasitimology, a chemical-based drug chemical-based drugs discovery. Right, fermented drugs example, for example, GLPs. So these are new biological entities in living organisms, drugs. Similarly, new modalities, peptides, peptide itself will become a $51 billion market. Because again, looks smacking Instagram better. Your skin will grow, all these things will happen. Jim trainers which have peptides. So those are things which are off the shelf. But new modalities growth rate accelerated because of AI as well. So actually, NCE molecule discovery is NBA molecules, and new modalities itself, these things are adding to the growth. So this company pipeline and this company anchor clients, I think this industry sky becomes the limit, as per the word of some of these CDM companies. So scale up LPS, E stands for economics of incremental capex. Suppose companies are not company, anticipation of orders. For example, 2024 dedicated block for this firm yon contract. Similarly, DVs 2025 blocks live. Instead of being a multi-purpose, contract confirmation. Right. So that's a good signal asset economics.
SPEAKER_03Right.
SPEAKER_02And the company Greenfield is a brownfield, so unit economics. For example, there's a greenfield capex. Greenfield Capex maybe power line dalni, utility dalni, right? So, you can't do that. But we may set up brownfields, then what happens is that your incremental ROC improves on the new factory that you put up. So this is the E part economics stage. BI industries are not going to be able to do this. Might take another four or five years, right? Because the economics of that asset that they acquired was not that phenomenal. And also, one thing that is very important economics of the asset. Employee cost, power cost. Even though it's a necessary evil sometimes because you have to be closer to your customers. But again, it's a problematic thing that is e-part, economics of the asset. India asset margin, operating margin, right? And also below the line, cost items, employee cost, scale. That is U and P up part. Up part of utilization and runway or P price versus the cycle. So U part of utilization and the runway. So the CDM company already if a company says almost 100% utilization. So you understand this company problem. So we have a problem. So before this podcast, we were discussing or restocking. So what were the reasons that we discussed?
SPEAKER_00Right. So it's simple terms.
SPEAKER_02Basically, Baha'c calendar year is January, February, March. Right.
SPEAKER_00Right. So Tabi Hameshaw blockbuster numbers Q3 or Q4. Right. Unless you have to is bar key transcript, and then by science, management explained. But lumpiness while a factory is an experiment confirmation. Or fair bathroom repeat order order. But mostly business.
SPEAKER_02So is the CDMO companies results two to three years?
SPEAKER_00Right.
SPEAKER_02Gap instead of year on year also in quarter and quarter.
SPEAKER_00Exactly. So expect expectations adjusting the nature of business. Right. So framework.
SPEAKER_02And I think Sid also mentioned one thing batch production. Right. Batch is a supposed school batch that 2013-14, right? So 2013-14 pass out. Right. So we have batch production. So sometimes the entire year of supplies goes in one quarter and also depends upon the molecules' own curve, like profitability and blockbuster success or not.
SPEAKER_00Exactly. So usually nature of business in the end. But we have expectations.
SPEAKER_02Right. Right.
SPEAKER_00Lumpiness. Right, right. Lumpiness.
SPEAKER_02I think last year blue jet is a bempedoic acid product. So they went through a de-stocking. So they restocking, de-stocking punch quarter order in the street.
unknownRight?
SPEAKER_02So we are careful. So the analyst molecules are not made. So we have to be a bit careful. Because we have to do it. So the management misguide six months visibility is a very good thing.
SPEAKER_00Right. F by 25 flat or flat thigh.
SPEAKER_02Right. Right. That is truthfulness about the management. So I think the last part is P price sensitivity to the underlying valuations. So no matter what the epicness or the epicness of the asset, if the price is too high, and we're de stocking to pita.
SPEAKER_03Exactly.
SPEAKER_02P stands for price, P stands for Pitai. Right. And P also stands for basically you doing well when it comes to price returns.
SPEAKER_00Like, because 10 out of 10 things, 9 things right to you, 10 cheese.
SPEAKER_02So P stands for price and P stands for Pitai. So I think this is a scale-up mental model which the audience can take and apply it independently. So we have scale-up mental model. So this session is not a good idea. So both of us did what we had six tiers CDM companies divide. So tier 1, tier 2, tier 3, tier 4, tier 5, and tier 6. Right. So tier 1, why don't you give an example? Tier 1 CDM is the same thing.
SPEAKER_00So basically, this blueprint tier 1 stands for executioners. Always prepared to execute no matter where they stand. They always aspire for growing, and that too Joby aspiration as a C DMO. So tier 1 examples? Example would be like Loris comes in this tier one, DVs Laboratories, Anthem Bay Sciences, Silai Sciences. So these are a couple of companies that uh that belong to Tier 1 because of their capabilities and their execution. And moreover, their uh USFDA track record also, regulatory track record.
SPEAKER_02Right, right.
SPEAKER_00And the kind of customers they cater to.
SPEAKER_02Direct type of customers, usually big pharma again. Right, right. Big pharma giants.
unknownRight.
SPEAKER_02I think I'm tier two. Right. Tier two will be your challengers slash focused. Yes. So challengers slash focus. So we can start big pharmaceuticals.
SPEAKER_00Right. I think statement is uh conference call maybe another new land once going forward. So about tier one aspireana. Right. So Pele molecule size, or up molecule size, contract size 500 to 1000 crores.
SPEAKER_02Right. So that is our tier two companies. New land fluorine, fluorination-based CDM okay. So fluorination-based CDM focused, right? So they have customers like Fermi on some of the European clients, right? US clients are biotech, big farmers are likely to come start. So that is an example. Then uh this uh challengers uh slash focus players chemical-based CDMOs, but again, your pharmaceutical is focused on acute ass chemicals because it is a very focused thing on intermediates. So acute as API intermediates because companies are intermediate. So they call themselves the DVs of intermediates, right? And DVs is like focused on APIs, right? The entire value chain inside, instead, like they don't do formulations, but intermediates ka DVs, that is acute as similarly, uh companies chemical-based ether industries, but they are very focused on the chemical uh cram space, so CSM cult, but in the chemical industry. So they'll have uh customers even outside pharma. They'll be in uh things like oil and gas also, bakery use ka contract Saudi Arabian company, Ramco Sadbi, uh, contract, right? New technology after fluorination, they have just recently entered. Upstream towards the tier Three companies which you and I can take.
SPEAKER_00So tier three companies ka so tier three companies would be vonavies, fake it until you make it. So perfect example would be RT Pharma Labs. Xanthine is the cash cow and then slowly building the CDMO arm now. I think Subria Life Science is also a good example.
SPEAKER_02Then anesthetics CDMO can that they are signing a good weak contract they mentioned in Q1. Granules example formulation business parasitomol, the world market leader, PAP can be a peptide CDM or platform Lilia Bar like more than $50 million. Let's see, C DM blocks commercialized, and customer side commercialization delay molecule. So these are companies API businesses cash flow CDM business stands in the same way.
SPEAKER_00Exactly.
SPEAKER_02Right?
SPEAKER_00Metamorphosis value chain climb. Right.
SPEAKER_02Last year company bought these stopping through. That is BlueJet Healthcare. To get more and more business into pharma intermediate. That is CDMO. But if you have a molecule, let's see how other molecules they get because it's not easy to get molecules, but again, over three, four years, whether they are able to crack it or not.
SPEAKER_00So next question is tier four bucket.
SPEAKER_02Tier 4 companies said Hero or Zero. Hero or zero companies. For example, I'll put in companies like your today, Sinjin, Dishman, Carbogen, companies like Kohan's Life Sciences. Right? So these are some of the companies I'll put in here. I think there's one more company which I'm missing out. Haikel may be a company, but Haikel, frankly, I don't know what they're doing. These are like make it or break it a hero or zero companies. The problem what happened is that promoter-driven business. So the innovator literally after years of hard work molecules. So they will expect the promoter to be on the toes, right? Helping the innovator whenever the innovator uh wants. So, um, management side issues, management change. Now finally use seems to be someone credible has come in. So, there were turnaround. So, this is one in the Q1 disastrous, but H2 growth. Second Singh Franklin 2016, um I think they say unseen value, they can't do it. But Singine CRO business is one of the best companies in India C DMO ni karpai. Synjin discovery arm manufacturing because of management issues, probably. Similar to Kohan's, right? Because the management has to be close to the innovator. They have to do what the innovator wants. They have to go to let's Murli DV till today sits in the plant, right? Because you're on the shop floor of the plant to improve yields. That is what the innovator is looking for. He wants your soul in the game, not skin in the game. So that is an important thing to look out for. So management change. Let's see whether they come back to the growth path from next year or not, because asset quality, but we don't know what's going wrong. Manufacturing reasons. CRB but manufacturing is not just happening over there. Frankly, I uh tracking Haikal. Haika used to track in 2017 to 21. But they did almost 8900 crores of CPEX, maintenance, capex, RD, animal APIs, everything. Crop business, right off, repurpose personal chemicals, right? So uh like these uh cosmosceuticals, personalized chemicals, and some tracking that business like that much, and then uh there's a company Dishman carbogen. So Dishman carbogen assets of Switzerland, those for this manufacturing regulatory issues via hero or zero stories. If they become hero stories, so turnaround. If they are zero stories, so probably nothing will happen for years. India molecules waste. These are small microcap companies who are trying to be C DMO companies.
SPEAKER_01Right.
SPEAKER_02These companies are probably second source suppliers. Take those source suppliers, eh? So we have a second source supplier.
SPEAKER_03Right.
SPEAKER_02So these are some of the companies who are not the guys who have discovered the molecule along with the innovator, but they are just providing another manufacturing unit to the innovator. So we recently companies emerged, like the likes of your um Moorepen, maybe uh Moorepen can be. I think that's a second source contract that they've gotten of 865 crores. Then there's a InSwift Laboratories, they are talking about the margins will sustain to a higher level. Then there's a Sri Ganesh Remedies Limited. Inherently, these are risky companies because these are tier two suppliers. But these are the tier 5 type of companies. But uh could be some of them might be interesting, they and might end up becoming tier 3 companies, right? So they can be a tier 5 company, tier 3, and sustainability to income income basically little babies. This will be our tier 5 term. So little tier 4 uh basically hero all zero, tier 5 and bowling little babies. But again, problem babies whether the baby becomes a boy or whether the baby remains a baby, so that is something that we'll have to see, right? Then finally, that is tier 6.
SPEAKER_00So tier 6 category is bowling copy cards. So early stages, so examples of windlass biotech, gland pharma, and then one source accounts in over captured.
SPEAKER_02Basically, manufacturing off patent molecules wellness locally, life science. Sorry. Many bananas brands, right? Uh trizepatide uh basically off patent jar, and trize patite maybe four or five years down line off patent jagger. So in contract manufacturing injectables, so one source. Right. Right. Right? So tier in eight years divide, CDMO landscape.
SPEAKER_00So, tier one executioners, just companies, large pharmaceutical.
SPEAKER_02Tier two was the companies which are basically the challengers or focused companies, which is biotechs, but eventually graduate to cater to the large farm.
SPEAKER_00So, tier three companies basically won a bees API, but use CDM transition.
SPEAKER_02Great. Tier 4 companies, which are hero zero, turnaround, basically they won't go anywhere for years.
SPEAKER_00So tier five babies CDM experimentation, so it's a tracker how they execute.
SPEAKER_02Basically, microcap companies, margins in the same way, and scalar second source suppliers. Finally, tier six companies are these are companies which are known as copycats. Copycats may be margins stable domestic C DMOs, the margins coffee stable beach, but in the shots of both high evaluations, but injectables interesting. So these are the six tiers of C DMO, each and every tier breakdown, different different players. Like the companies, innovator work career at scale, and big pharmacists are the com career, and companies cutting edge career, right? So uh these are the companies over to Sid, he'll explain their unit economics and what is happening in these companies.
SPEAKER_00So coming to executioners, uh, companies, DVs labs, Loris Labs, Anthem Biosciences, and Sil I Sciences, and some common sees the career, and sub margins. Sub margins above 25% or Silai Sciences margin rounded off, but we have 25% plus and if we see Q1 maybe uh margins over expand and uh margins. But management going forward improving trends overall in growth. Uh, next slide overall, financials, DVs laboratories may be marginalized, uh, expansion phase or inflection or job, operating leverage coming years, so we have a trajectory. And coming to Loris Labs, we can see uh that in margins uh quarter improved. And um data execution is there. So if we look at uh and them buyer sciences also, uh they are they have also grown in the last five years. And coming to Sci Live Sciences, uh they as well have grown their sale from 760 crores to 2192 crores.
SPEAKER_02Just to add to Sid's point, DVs and Lores case FY2122 may COVID supply the DVs labs, uh, Mollupira virtable. So Dunno companies one of cash bumper cash flows, and bumper cash flows like Capex will cover the Capex, Loras C DMO capacities build DVs may be C DMO capacities build and uh DVs case, I think very recent quarter, I think the C DMO business crossed like 55 to 60 percentage of their overall revenues, just a margin forty-one percentage. But a good CDMO company has been growing. So overall margins are like sales 6,800 crores, but within this, the C DMO business has exploded literally 2020, which we know that the CDMO business size, but Q1 alone may Lawrence CDMO business was more than 800 crores, right? Which is equivalent to their annual revenue of CDMO business like two, three years back. So that's the J curve which is happening within these companies.
SPEAKER_00So coming to DV's labs, so DV's laboratories has backward integrated into uh setting up reactors uh of SPPS and LPPS. Uh basically is a lot of big clients like LI Lili and peptides or GLP ka bi both beneficiary since it has all the capacities in place and building blocks for peptides also in place. And it has got three dedicated custom synthesis uh projects also that will be commercializing in Q3 and Q4 of current year 2027. IoD in contrast, media long-term contracts also it has got substantial quantities, orders, and ramp up uh which will lead to improving asset turns and uh uh increase in the ROC.
SPEAKER_02So, I have a podcast that FI25 Fi 2526. So, we have ramp up phase because in clients like polypeptide, so export data they have some of these clients. We have peptide value chain building blocks, fragments, API or end formulation fragments building blocks, coffee big way present peptides and uh DVs problem NCE uh CDM discussed, but DVs large molecule CDM with the advent of peptides. So uh DVs almost 3,000 liters capacity, SPPS reactors and peptides margins are higher. Uh Sid will now cover the part on Loris Labs.
SPEAKER_00Yeah, so coming to Loris Labs, uh now Loris Labs fermentation coffee reactors installed uh that is in Loris bio. Uh 400 plus uh kiloliters fermentation join fleck. Even uh it has pre it has prepared itself for uh uh accepting uh peptide and GLP1 orders. Commercial block, I think uh Q2 FY27 and then uh FY28 uh units will be doubling, uh doubling for the 50% uh uh CDMO guidance given by the management. And phase three uh commercial conversion wave across 125 projects, or uh the guidance for the CPEX had also been upgraded by the management from 1000 crores to 2000 crores.
SPEAKER_02And just to add to Sid's point, um pipeline just phase three can there for 125 molecules and um just for uh these CDMO blocks. So animal blocks, animal CDMO, crop protection can be but majorly big pharma, DVs and Loras are working, and Loras is also commercial like putting up commercial blocks for peptide and GLP1 from Q to FI27. So peptide is not a buzzword anymore, like execution for them, peptide will add to margins. This is something that I'll cover in depth.
SPEAKER_00So, interesting insight. Loras laps and calling, such as a question, management qualitative aspect indicate management or question. Uh see in the C DMO business, what we have realized is that customers would like to see the capacity before giving products. And second, the trend what we have also seen when they put a very important program updates, they don't want to see that batch size increases. They don't want to see change of manufacturing lines, change of manufacturing sites to minimize the regulatory complexity. Since we realized this very early in the CDMO growth, we did invest aggressively. So the reason Q time law is aggressively expanded.
SPEAKER_02So basically, company in spite of headwinds, right? Uh like like basically at that time uh like the stock did fantastically well over one, two years, but then the business went under headwinds to be cyclicality. But for two years, credits to the management and also credits to Sajal sir because he was there in each and every con call. So substract anti-fragile because it is one of the places to learn about CDMO in India. So uh services substantive YouTube free videos, prints, accidental investors. So, ideal CDMO business because he's been discussing this business since years now, and he was right in saying the company was investing far ahead of demand, and now that the demand is coming, the company is ready with operating leverage. So, this is of uh DVs and Lawrence Labs. So, what about Anthem and Sci Life Sciences?
SPEAKER_00Right. Uh now coming to Anthem Biosciences, Anthem Biosciences new chemical entity and new biological entity across eight modality platforms present. So only CRDMO, which is eight modalities, H2FY27 delivery catch-up, 60% on the order book. So management clearly highlighting these stocking customers experiment basically countries. So now we will see moving forward improvement numbers. That's what the management has guided. Uh semaglutide, CDS approval spending, and fully backward integrated GLP 1 ramp. So common cheese GLP 1 enter and already approvals pipeline. So now coming to Silai Sciences, which is another cream of the crop CRDMO discovery to drug development to manufacturing present so that we can plant 70% capacity live to FY27 and Capex 1100 to 1300 crores, and four new commercial molecules are ramping up, three already are in production.
SPEAKER_02So basically, just to add to Sid's point, though, anthem biosciences uh new modalities, so peptides, anthem biosciences, like peptides maybe uh anthem bio. But anthem biosciences bios similar, maybe which is uh not a patented uh product. It's like uh like the first copy of basically biologics, and uh psi life sciences 34 molecules commercial, the char or new commercial uh molecules rampore to case last year. Anthem biosciences case, case best margins, anthem biokay, but CRO to C DMO they can get four out of the four companies that is Psy Life Sciences. Now, a very important point to understand is which are into the innovators C DMO, right? So, DVs scale subscribers, biologics, so tides platform peptides or ego nucleotides. So, I bet the margin has gone above 45-50% in the tides platform because of the higher margin nature of that. So DVs and Laurel's peptides, anthembi bath karas, high life sciences, high life sciences the new modality, four to seven percentage of revenues are DVs ka peptides ka platform both J Kov ki ramp up karte, so both carefully track next one two years. Market we can use recognize case can be big molecules, big pharmacy military lorosco, which are going to scale up big time. Anthem biosciences case molecule uh concentration risk and uh per anthem case margins can lead like a better Sci life science case, unlike anthem, CRO business, C R DMO business, so integrated business, they have a lot of funnel of molecules, I think more than 150 funnel of molecules, but they have to see kit commercial scale of Anthem case, one blockbuster drug, Sci Life Sciences case, they have to see if they are able to crack big blockbuster drugs. That is something that you have to track because CRO business ka margin, C DM margin jader, but C DM growth better CRO PC life sciences, so 27-28% margin could scale to be much higher over a long period of time. So these are the key differences to understand amongst them. And this call cheese to remember in the C DMO business, NC or NBA primal description box company basically large molecules presence, peptide itself will become a hundred billion dollar market by twenty thirty-four. So is companies chemical entities, NBs maybe peptides can the oligo nucleotides can the RM just company scale up, margins make upward bias V res. So this is a tier one of companies which is executioners. So companies real C DMO capability possesses, New Len, Naveen Florine, Piramal Pharma, Rajan Life Sciences. But in companies may mix cleaning companies, commercial like a big sales portion, Aki molecule, biggest part of the pie. Acute task nearly um thirty-four percentage Ibada margin overall FI twenty six thirty-six Newland car twenty-nine percentage, FI twenty six me, Q one may thirty five percentage, lumpinesti. Navinka case, to thirty four percentage Ibada margin the ref gas driven margin. Piramme dictate to piramalme subsidy inside yeah, yeah, kid just C DMO key capacity is Baharo in India, say Mabe margin banana, bohoth, mushkel hair. Piramalme, yeah true hair, dishman carbogen may true hair. Let's see, granules case make other kicking on a big Swiss capacity peptide ski. A rag in life science is Nabna IPO file care, so let's see in the DRHP file, close to the IPO. We might make a video on Rajin Life Sciences. So these are your tier two companies. These companies are working with biotech companies, innovator pharmacists are not going to be able to get big pharmaceuticals. But in ka bi scale up, Utana Bada new some other tier one companies ka okay. Naveenka case, C DMO business, seven, eight or eight, nine hundred crores. Right? So these are the financials of these companies. I think accutasca twenty-four thirty-six percentage, ebita margin okay, Newlinka sixteen says twenty-nine, uh Naveenka twenty-six thirty-three, Piramalka twenty-three say actually ten, uh, twelve, sixteen, again, foreign uh entities own a say margin manna mushkele, may 27%, ebita margin. So we'll cover some of these companies. I think SID will cover accutas and newlin. I'll take Naveen Florine and Piramal Pharma.
SPEAKER_00Right. So coming to Acutas chemicals. So in business advanced intermediates ka, just C DMO business ka guidance 1000 crores scale up carring and uh FY28 achieved target and four new validated products from uh H to FY27. Battery chemicals ka be ramp up hoyak, uh, which is which has been commissioned and full fully contracted. And then uh coming to the main and uh new driver uh for growth, that is Indicam Korea revenue, uh, which will start coming in from FY28. Or interesting cheese AI-driven semiconductor demand chemical company. Unkillish utilization is currently 23% operating leverage, so capacity utilization ramp up ROC or asset terms improved and FY27 guided KPEX 90 to 95 crores.
SPEAKER_02Acutas case track that is darlutamite, darlutamide, and darlutamide, which is a prostate cancer drug, which is the bulk of the CDMO business today. Next one to years a growth ball blockbuster, but darlutamide or phase readout mixture therapy use with other drugs. So track bears, Nubeka and the track. So closely how the darlutamide oftake keeps going in bears con calls because acute ask at the end of uh end uh fortunes as CDMO business, darlutamite is attached. Now coming to Newland Labs. And Newland case, I think last 13 quarters they approved a capex of 14 and 60 crores, just 870 crores spent again time. Uh they are talking about multifold scale up. 2728 already 20% growth guidance. So, whenever they give a growth guidance, generally they have visibility inside. So, Newland case, some of the molecules which are there, uh Coben 5 molecules, unit 3 dedicated block. Let's see how that goes. And uh there's also another, I think, ADHD molecule, export data, February export data. But there are three, four molecules which are driving the bulk of the business today. But Newland will be interesting is the peptide plant, 6.37 kiloliters, right? So that is a multifold scale up. So Newland generally plant anchor customer, right? So let's see if business can anchor customer. Coming towards Naveen fluorine, Naveen fluorine case H32ka almost uh 15,000 tonnes plant life. So refrigerant cash-driven profits are in the next one month and a half year. But CDMO, three to four customers, FDA readout in the next 12 months, they are the second source supplier for Dalutamide as per their investor day. And uh CDMO is CGMP4, CGMP5, CGMP6, and in the data center cooling solution may be plant, MRs ka, but all those are non-pharma related optionalities. This is the $100 million revenue C DMO, margins in early 30s to mid 30s margin sustained because the biggest risk with Naveen is the R32 prices because R32 in the profitability drive. But in the CDMO business may click coffee because they are getting three to four new molecules. So molecules, it's not a nine kb's announcement CDMO business, so it's CGMP four, C Gmp five, CGMP six announcement. That is what will write the CDMO business for Navin Flory. Coming towards pyramid pharma. So pyramid case study because pyramid, right? So, cheese the pyramid, right? Even though pyramal pharma CDMO business, but pyramal e beta margins, right? Like 14, 15 percentage margins because AK reason is capacity outside India. Similarly, a few tasks example, just intermediates C DMO Kathy, the ABC margins 37, 36%. Similarly, DVs example, the margins, margins 35, 32, 31, 28. Reason being because within India capacity CDM margins are superior. Something that you must remember capacity is the rural margins superior. Right? So Rajan Life Sciences IPOS covering. But these are the tier two CDMO companies. If tier one or tier two, they go to tier one with Sari companies studying pipeline interesting uh Newton Labs 2728 good growth guidance area, or especially acute asking, next phase readout, combination therapy approval, to Daluta might keep patients overnight, double Ojanga, beers keep commentary closely track. So then TL3 companies in uh key dincom wannabe companies, settle wannabes can equal Tavia Sakuadre, Halaki companies wannabe which companies CDMO business key optionality already start, and some of these companies already have very good business models. So, these companies are API business, right? Yad companies formulation business, companies, agrochemical CDMO business, and they are using those cash flows to get into pharma C DMO optionalities. For example, there's a blue jet healthcare job contrast media business use, they are trying to get into the pharma CDMO. Pharma intermediate business in kaffi C DMO business intermediates. Grand news in here, Jobna uh PAP ka intermediates or formulation facility uh like a integrated in ka business paracetamolme. Uskelec peptide entity acquired career, switch CDMO karma peptides. Again, they have this API business, 33 to 35% margin comate. Similarly, anesthetics, C DMO business enter, and expect a large contract sign in Shilpa medicare formulation, uh APIs may then also they are into biologics, they're also into NB C DMO and NCE C DMO. They have taken their formulation and API business, and now they are trying to get into the C DMO business and also they're doing their own innovations as well. So peptide can Shilpa is also filing a lot of interesting molecules. PI industries have agrochemical CDMO use karke, enter career, pharma C DMO. So QIP karke, fundraise karke, they have acquired uh companies also, but PI industries story stagnant last five years, optionalities are and finally pharma labs, Zantheme or API business, cash flows use karke, C DMO enter career, and C DMO business scale, and finally dedicated block announce. So these are the wannabe companies, but you can take the mental model. Um formulation of business bulk of the revenue, but these are companies who are trying to actively get into the CDMO business. Now, these are companies again margins are dick, so just F5 26, 22 to 23%, blue jet key 30 to 31 percentage, but it's a margin, right? But blue jet case may contrast media may be margins, but bluejet can be stocking together, cash intermediate, those value chain des stocking. But they are expecting more molecules, but the generic portion of CMO jada, right? But they are taking their API business, primarily Glenmark, and they are trying to get into the CDMO business. Shilba Medicare just 27-28% EBITDA margin, Q1 was a blockbuster quarter for them, but that was led by licensing income in the formulation business. Then granules India Jinka 22% EBITDA margin Q1 met growth, I think, 23% EBITDA margin Q1. Granules India case peptide-based CDMO company, Switzerland company acquired, $50 million guidance with 30% plus Ebita margin in three years. Superior Life Sciences C DMO business comportion of the revenues. But they are expecting a large contract signing in the CDMO business. Then finally, PI industries paroxysm a key molecular job is time to generic or agrochemicals, but they're using the cash flows and they are trying to get into electronic chemicals, they are trying to get into pharma CDMO, and also they are trying to do their own innovation when it comes to agrochemicals. So these are the financials of some of these companies. Because in pharmacy business contract last year. Similarly, Alibus case my margins are pretty high. Shilpa Medicare case margin 20% is 28%. Now we are at an inflection point, and now it seems that our business will inflect massively. Similarly, granulose case may licke the margin twenty six twenty-two I am case, forty four-six, PIK case, twenty two say twenty-five, twenty-six, but a recently margins contract on the PIK case because in the key molecule generic okay. So these companies are inherently volatile because CDMO business may successfully enter time. So case studies of like some of these companies. So Altipharma Labs case, Zanthine business time ramp up career big time. C DMO inflection to FI twenty two thirty two crores CDMO business 276 crores, and FI thirty company, thousand crores C DMO business career. They have set up a dedicated intermediate block that Joe basically H2 of FI twenty eight jagger and a capex care. So Altipharmal labs C DMO business be big enough newer to add to their overall profitability. But currently it is close to two seventy-six crores. This management career is Fi 33,000 crores up there. So unseen values are not going to be able to do that. It's a tier 2, tier 3 CDMO where they take second source molecules and then they start scaling that data. So basically, development journey innovator. So you have a gross profit margin 60-65%. Not maybe very high, but still high enough because 2022. So margins are 25 to 27% Hidrogas. Right? So, importantly, similarly, BlueJet Healthcare. So BlueJet Healthcare will be QP QIP career, right? So QIP career and uh like almost um thousand plus crores. So Vizac over the next three years they'll set up a new capacity. But currently um bluejet case business is volatile because contrast media sweetener business and majorly in the CDMO value chain, so in a major business bamboic acid, Joe Esperion uh just Bemdoic acid actually Newland B, Blue Jet B. Lot of people in the uh lot of people in the pharma industry also say more ban has also studio has started doing uh bamdoic acid, right? Because like whatever large contract that they have right now. So Blue Jet Healthcare case may intermediate in capacity, I think in intermediate France, France, API, for and Piramal Pharma Company, for formulations manufacture. Now these are my derived insight by looking at the export data and looking at the numerous uh like filings. But blue jet case, lumpiness, CDM, they don't crack new molecules apart from bambatoic acid. It is very early stage. It's maybe generic C DMO bother is behind the curve, but it'll take some time for that to click. FY27 will be your early teens growth here. FY28 capacity scale start. Shilpa Medicare detail because Shilpa Medicare is a business. And uh also speciality CDMO segment this is ABI CDMO, peptide and polymer, 110 crore 526 revenue. So inflection dedicated block OLCL, that is oxylanthium carbonate for uh innovator by the name of UNICE US company. So this company approval another for Kiawa US FDA approval on the packaging facility uh problem US FDA to approval delay. A be in the NDA with the June twenty ninth, twenty twenty six summit onada. But apparently thulasa all shads have been delayed. But like Shilpa Medica dedicated block for the manufacturing of OLC, which is used in the treatment of hyper uh phosphate in chronic kidney disease patients clear on dialysis clear so this can be a potential uh blockbuster molecule for Shilpa Medical. So dedicated peptide blocks basically in the right shore value uh facility and large solid uh phase synthesis expansion. So basically, API validation batches in the basic stability test global uh filing plan kar for the global markets, but this is a generic drug. So DMF filing H1 FI27 Fitzzipitide is a lab development complete uh complete karma, and ski scale of start, then uh t2 glutide, which is a lab development uh complete karma, and ski validation badges H1 FI27 and uh also peptide segment, they have a very strong order book for FI27, and let's see how they do because it has one of the largest uh solid phase synthesis capacities of peptides in uh the country. Then a core in ka key molecule that is recombinant human albumin, this is a lab grown animal origin free to uh alternate to plasma derived albumin, so uh made by yeast fermentation. So 2015 trial, in Orion uh corporation, is basically exclusive type because they are the European commercialization partner, right? So this could be a huge molecule because it's a dedicated facility, Karnataka, right? And almost 500 crores cumulative investment. This phase three trials expected India and Europe originator or innovator category. So let's see if they crack this, but because this company is sitting on a time bomb of optionalities, so it is remaining to be seen how they do in this, right? Similarly, biologics, CDMO, five active basic novel uh biological entity programs and partners and CDMO contract bees may secure right so again uh Shilpa has its uh fingers in multiple types of uh domains, generic peptides, uh like albumin ho, right, could ki innovation NCCs innovation dedicated block for OLC for basically uh for uh one of the US innovators. But if some of these click, right, then the company could have a Jacob moment. So already I think markets have started recognizing at the moment. So Shilpa may have optionalities and Shilpa, I think Capex phase is behind the next two, three years company, harvest phase. Then there are other companies like Grand News India. So granules uh peptide C DMO base asset acquired like almost 50 million dollars, guide sales. That is uh close to like 500 crores with greater than 30% eBIT margin, but in the asset Switzerland, right? So that we have to see how it scales because um like asset case, is that your um like margins could sometimes become lower. So how their margins are uh pad margin or three customers with more than 10 million dollars revenue each. But let's see how they do uh because in the C DMO business is still new. Then finally, make but superior life sciences discussion to superior life sciences, superior life sciences, summary baby, superior life sciences, superior life sciences, anesthetic C DMO, a term sheet signing career Q2, big uh contract for C DMO and in margins reward curve thirty three to thirty five percentage in Q2 of this financial year. Because there were a couple of one-offs which took place. Let me take you to Supreya's concall because this was an interesting one, right? So their growth was hit by water but not demand. So Q1 major results of the results because water is case basically lot, but that led to a temporary dip in margin. Also, another thing was that solar policy change is a punch hit. So, CDMO qualification work in the large large anesthetic CDMO contract expectation next quarter. It will be one of the biggest collaboration areas they have with the innovator. And five to six products CDMO pipeline across tablets and injectables with collaboration from Europe and North America. And uh basically dedicated infrastructure, CDMO or CMO, and uh team, just my Dr. Shri Shambhitkar is uh in place. And also uh management mentioned C DMO business dates, those are three to four years horizon. So, this is something which I really like that what the management mentioned. This company Q1 can issue results, so Q1 can impact the margins, degrowth, but Q2, Q3 says, margins will start reverting at least quarter on quarter from Q2, and then Q3 says the growth will start coming back in Supreya's case. But Supreya case C DMO business, but binding term sheet sign for anesthetic C DMO contract, then things could start looking interesting over here. Then we have a core company that is PI industries. So, PI industries case has been doing like agrochemical C DMO for years now, but PI case is a molecule pyroxas. Uh CTRK jump almost of Jesus of patent prices like 10x over capacity when price is filled by 80-90%. Like similarly, pyroxas may be SRI. So PI industries are PI industries like pharma when they acquired, and then they have started doing new molecules in their agrochemical CDMO business. Why am I covering TI industries into this? Because see, it's a uh OG company PI industries because they're one of the innovators of the C VMO sector in agrochemicals, but they have not been able to replicate the same success in electronic chemicals and the pharma CDMO business right now. But see, promoters think about the business in terms of decades. So, PIL growth, otherwise, the business will keep stagnating over the next two, three years. But then, because now they've entered pharma CDMO in a comprehensive way and they've also come into uh electronic chemicals, right? So let's see if it growth FI28-29 inflect and yota. Because FI27 will be mostly a mid-single-digit growth here for them. So, PI industries. So, PI industries 43% of revenue almost that is the uh Pyroxa cell phone business. So, I think that's the business. But business of patent and PI and cash flow, just Lawrence, Lawrence got uh like massive cash flows from uh this pack slow white. So, cash flow use CDMO business setup. But now for PI is also trying to get into the pharma CDMO business and multiple other options. So agrochemicals 15 to 20 new molecules launched 8 to 10 or target FI27 order book 1.2 billion dollars, FI23 peaks below 18% of their now uh revenues coming from new molecules. Biologics business agri sciences new molecules launch, but again, a big chuta business, but 120 crorespas ka uhx marketing mixpenditure, right? So that is there. Then uh they have launched their own uh NC. So basically it's a category of diametes, Jinka 2039 patent life. So, Phoenix Pro Kirken molecule launch karm, FI twenty eight meaningful quantities contribute. FY twenty six may nearly forty percentage growth and five hundred crores, twelve to eighteen months, they're guiding for EBITDA break even. But pharma pay they can be because pharma pay again inflect, industries will grow go from one growth engine that is pyroxal sulphone to these some of these five other engines. Then electronic uh chemicals per annum kiaspas ka they've uh like uh they're setting up a new plant and Q1 FI twenty seven may commercialize. Right? So this is again uh business. $100 million target five to six or four to five years and uh maybe they have customers like Daiken also like environmental clearances, some of the molecules are mentioned, but this is not confirmed by PI. But let's see electronic chemicals maybe because that is also a huge optionality space for PI industries. Right? So, what we have to track over uh here carefully is PIKs, core motive disruptor, that is pyroxide cell phone, advance cash flow use, pharmaceutical business, could launch agrochemical can there, uh basically biologic side, opex, and finally electronic uh chemical business Dalajare. Right, and also the thing is to uh look at is ki a detailed thread per second, value picker jambe uh PI industries ka uh basically growth triggers so you can read that thread. I've attached it in the description uh below for you. But all of these things are from their con calls, actually, electronic chemicals 2015-2016, and uh let's see how they scale, but uh still um yet to be seen because markets are circumspect. Next one, two years earnings may impact even though terminal value, these are the correct activities, but we have to see how after one, two years the company inflects. S cases I wait for the business to inflect or I wait for the quarterly results to improve before sort of looking for the confirmation. So these are the one to be companies in the CDMO, tier three. So we have to see how these companies do because volatility risk reward superior, company actually, CDMO business, and existing cash flow volatile lumpy, so this was our tier three of CDMOs. Uh towards the tier four, which are zero or zero companies. Now, these are companies which might turn around or which might not turn around. So companies are like Syngine, Kohan's Life Sciences, Heikel, and Dishman, Carboja and uh like uh Amex. So these are the four companies which come. So companies may have issues, companies financial disrupt. For example, Sin Gene case had a 16% degrowth in Q1. Kohan 23% degrowth, uh Haikel case, the five-year revenue C AGR is minus 0.1, Dishman carbojen, they case the Q1 uh growth is minus 4.3, and also the EBITDA margins for these companies are not so high, even though some of these companies have proven themselves to be C DMO companies in the past, right? So, how all these companies have had huge dip in margins, right? Dishman carbogen case margins, but still uh like five year pad dict to losses, X Hal profit ROC barely 3%, Haikal case 4% ROC a barely, right? Kohan's case, 8% ROC barely, 10% ROC a barely. So these are turnaround candidates or zero candidates. There's nothing in between, so these are very high risk ones, right? But let's see what is happening over here. So Synjin case key molecule, I think uh so that that is one of the key molecules just clear manufacturing. So uh basically that molecule had a de-stocking year in FI26, FI27, just growth but that was the bulk of their business. So in the Mangalore 2016, manufacturing plant. But C DMO side syngine is not that good. They're getting into new modalities like ADCs, peptides, oligonucleotides, and uh currently Syngine has completely changed its uh top management, right? So Jonathan Hunt, but somewhere or the other, I feel Syngene lost the race because what a sci is doing, what an anthem is doing, what a DVS is doing, what a Loris is doing, something that Synjin should have been doing. But Syngin, in spite of very good capacities and capabilities, just shows you if you don't have a stable uh like management at the top, it's very difficult to resurrect the business, or it's easy to lose this business because it's a tough business to do at the end. So Sinjin may have new management Q4, FI27, or Q1, Fi 28 around the case, Kohan's case maybe Kohan's fellow pharmaceuticals. So Kohan's case maybe they have sort of uh changed the management because they also lost a lot of business. Last four quarters have been disastrous for the company. So mention Q1 Fi 27, actually, Q2 FI27 sequential recovery. For H2 of FI27, growth, but FI28 growth. So 10 molecules phase 3 can be 5 close to commercialization, that is what the company talks about. But Kohan Suwen is a company char molecules say 21. The four innovator molecules were leading to the bulk of the SUV at that time. But the problem is patent expiry on the validity. That is what Kohan is facing today. But uh in clients, all the big pharma clientele. We closely track if the growth comes back or not. So reinspection end of FI27 frankly, I don't know beyond a point what is happening over here. So uh let's see whether it's a hero or a zero case, but uh like the type of execution has not been that good in the last four or five years, and numbers are there for everyone to see, like, numbers don't lie. Then finally, Dishman carbojen it's another company like phase three coffee molecules, I think 10 molecules and uh the thing is again important. Because manpower cost Dishman case may be a problem that uh niche pattern interest costs, depreciation cost, debt and uh problem, Dishman case Switzerland molecules, Indian manufacturing. So if you ask me out of these four companies, which companies have the highest probability of a turnaround, maybe first will be Kohans. So you have to track Q2, Q3, then could be Singin, Q1, F528, whether the new management starts doing in manufacturing or not. Then it could be Dishman carbogen, India business clickata, but Dishman has had multiple misses over the last five years, and finally it could be Heikel, but Haikel uh frankly uh fourth, you can use the US FDA should resolve new other mushkele. But these are hero or zero C DMO businesses. Hopefully, you understand the tier four classification. Now coming to the tier five uh type companies. Now these are these are little baby companies, so I'll just take them as examples. So, this volatility is companies like InSwift Labs, Mordben Labs, She can HMEDs. So this is a company example to target discussion. So um Modben Labs discussion. So remaining three you can read She can age MIT volatility because we have to use the InSwift Q3, Q4 margins uh mid-20s when you're gonna be able to do it already. So 18% margin, 20% plus margin. But I'll just take one or two of these companies and just discuss, right? So Mortband Labs example labs case they have signed a big CDMO contract of 825 crores. Let's see who this customer is, could be a chloristroll drug. So maybe they can do 30 to 40 percent margin levels in the CDMO ramp up, and uh that is uh like Q1 can uh 58 crores remaining rest of the uh financially 825 crores CDMO. So profits, but management closely track because in medical devices, business, pastory, slump sale, and so those things you have to track carefully when it comes to motor labs, uh right? But baby CDM to eight molecules growth are similarly, so intermediates, pharmacist or agrochemicals, which ID products, right? So these are also small molecules dedicated blocks. So in bought des stocking, restocking in Swift case after selling their business. Now finally, it's a debt-free company. So, C DMOR second source supplier to likes of Vatrice, Manx, and uh basically AeroTex. So these are some of the other molecules, like the customers they are working with. So let's see, but it's a formulation C DMO for these companies. So you can track these companies, but uh like understand it's a very risky space to be in, right? Because these companies will have one molecule which will lead to J-curve, same molecule can lead to opposite J-curve because uh d stocking, restocking is a part and parcel of the cycles of this product, like this industry. So tier 5 companies. So companies are like Windlass Biotech, Innova Cap Tab, Land Pharma, One Source Speciality, Akumsbi company basically windlass or innova captap, domestic industry, CDMOK and contract manufacturing, just say uh Zidus Life, parasitomology contract manufacturing. So, this industry they can get Innova 34%, top line growth, uh wind loss 18%, gland 20%, one source, 37%. But all four companies have different different vectors of growth, which I'll discuss with you. But all four companies are domestic businesses on uh pad growth, coffee, ignorance, straight line with land pharmaceutical lumpinas, injectable C DMO can be a CMO uh off the patent drugs, one source specialty may the king just loss making it, just profitable Q1 can require. So, what are different vectors for these companies? So, windlass case may uh like plant six key commercialization sixty days and also injectable plant lagada so ramp up the case maybe ESOP in the EPS impact. So H2 of FI27, I'll urge you to read their investor presentation. Optically the pad growth will start looking better. So windlowski case may again uh they do generic skill C DMO right in India, contract manufacturing 29% growth Q1 may have time, it is better growth, but I think H2 of FI27 uh this company may ESOP cost growth better. In Nova capta case, uh this is GST rebates in committee, right? So uh like so ramp up chalk from twenty-five to thirty percent to sixty-five to seventy-five percent ramp up in the next one, two years knows up there. This margins increase up. Even to slight margin positive, they send overall profits impact. Right? So this is also a company Jap uh like the C DMO business can grow domestic, and in the Kutka branded generics business before Kepek's Huracan operating leverage case maybe Gland farma, FI2930, they have signed a big CDMO contract of 90 to 100 million scale basakes between uh like these three companies, gland pharma margin highest I'll urge you to look at the standalone EBITDA margins of Gland Pharma checking the 40% stand alone uh complex sterile injectables margins. So they are doing complex APIs and uh peptide fill finish capacity, Fi 3031, GLP1, weight loss drugs and also uh like Sinexy guys' business turnaround on the both important pharmaceutical consolidated base, profitability so Synexy is something that you have to track when you track land pharma and you have to track stand alone EBED margins. So already uh 35 to 40 percent HK beach. Recently, tie up land farmers. Why Newland Labs recently in case tie up the reason being because injectable facility and now gland is already proven in injectables, so that is why your tie-up has been done. So, gland pharma is going through a turnaround at the moment. Finally, one source, one source case, GLP 10 pen capacity in the India largest capacity for generic GLP 1 manufacturing. So, cartridge filling and pen assembly manufacturing. So basically, um for NATCO pharma, they are uh the contract manufacturers first to file opportunity. So, like they'll be the ones who are doing so if I have 29 to 30 zip, right? So 2930 uh and also soft gel capacity next 12 to 15 months, uh basically capacity may operating leverage as one source case may and soft gel capacity lagrake, inka injectables capacity lagrake, fill finish capacities like GLB one cale. One source speciety farm case may guidance basically guidance declar there, the company four hundred million dollars sale career, this is forty percent margin FI twenty eight, karasically company fourteen hundred to fifteen hundred crores, and uh third sterile line installation beast time. Right, so they can basically generics of GLP one agar birth world me, when you injectable business like in case of fill finish capacity, cartilage, pencil, so that will start uh basically contributing to their growth rates. So, simaglutide ka jo basically uh first generic wave that is built on the one source capacity. So let's see how they are able to crack it or not. So this is the tier six of the C DMO company, right? So this is uh like the all the tiers that I that I've covered with you, right? So just uh to rehab to basically recap, basically companies uh like uh like tier for six tiers. First year executioners, they can likes of DVs, likes of Laurence, likes of Sci, likes of Anthemati, Beka mari tier two value companies, tier two my companies challengers, and Joby biotech, but big pharmacist, companies like Newland Ati, Acuta in the Wien Ati S and the Wienman New Molecules Millenni. Firme tier three companies, just maybe companies are bonabies, jobne API of a core business co scale like uh say adjacent seems like cash flows, C DMO business can be these are your companies like Shilpa, PI Industries, Alti Pharma Labs, etcetera. Then I'm not tier four companies decky, tier four companies may upki hero or zero stories at here, just may likes of uh turnaround companies are like Kohans or Sinji. Finally, I'm not tier five companies, tier five may have little babies, like in Swift Ogya, More Pen, okay, yeah, like your companies like SGRL, SGRL OG, and finally I'm not tier six media, Jomari copycat C DMOs are there. So fully I'll keep them key thought process about clear okay. With this, let's go towards the conclusion of this video. So in conclusion of this video, I'm looking at exactly video CDMO sector from the different players, then we learned about each and every type of tiers of CDMO, then I'm scale-up framework, and then I'm gonna each and every tier ones, tier six C DMO Jageka, what is the framework to take when it comes to different tiers of C DMO that we assess? Hopefully, you loved this video. If you loved it, do let us know in the comment section below. And SE SC different different videos, EMS sector ho, power sector ho, semiconductor sector, different different sectors. Do let us know in the comment section below. With this, I'll see you in the next one.