Anthem Biosciences Limited (ANTHEM) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Anthem Biosciences Q4FY26 Earnings Conference Call hosted by JM Financial Institutional Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amai Chakalay from JM Financial Institutional Securities. Please go ahead.

Yeah, thank you, Alrik. Good morning and warm welcome to all the participants on Anthem Biosciences 4Q and FY26 earnings call posted by JM Financial. Today on this call, we have with us from the management, Mr. Ajay Bharadwaj, Managing Director and Chief Executive Officer, and Mr. Gavir Bek, Chief Financial Officer. I will now hand over the call to Mr. Ajay Bharadwaj for his opening remarks. Thank you and over to you, sir.

Yeah, thank you, Ameh, and thank you, everyone, for being on this call. Good morning. At the outset, I'm very pleased to say we ended the financial year 25-26 on a very strong note. Our consolidated revenue from operations for the full year was 2,124 crore. Out of this, our CRDMO business contributed 83% of this revenue. Thank you. 1,773 crores, which was an 18% growth over last year. Speciality ingredients contributed 17% of our revenue, and that delivered 352 crores worth of sales. We delivered 156 crores other income for the financial year, taking our total revenue to 2,280 crores, which was There was a growth of 18% over last year. Other operating income includes gain on account of Forex and Rotep export incentives of 63 crores and financial and other non-operating income of 92 crores. Our EBITDA was just shy of 1,000 crores at 990 crores, which included other income, with EBITDA margins of 43.4%. Thank you. A growth of 31% on absolute terms and 420 basis points on margins over the last financial year. PBT before exception item was 849 crores. A word about the new labor code impact and tax expense. Our profit after tax for the year was 592 crores, a growth of 31% over last year with pat margins of 26%. Net cash position as of March 31st, 2026 is 1,375 crores. With respect to the quarterly financials, this was our highest revenue quarter ever, which was, that is, in Q4, FY26. We delivered a revenue growth year-on-year of 36% for the quarter, consolidated revenues at 611 crores. The CRDMO business delivered 513 crore revenues with a growth of 31% on an year-on-year basis. Sociality ingredients delivered 98 crores, a growth of 8% year on Y. EBITDA, including other incomes, was 318 crores, a growth of 52% over last year with EBITDA margins at 48.1%, to be precise. PBT before exceptional items was 277 crores. So we reassessed the impact of the new labor code changes, factoring in the revised remuneration structure. As a result, we have recognized a credit of 98 lakhs as exceptional items on account of the new labor code implementation. PACT was 190 crores for the quarter, with PACT margins at 28.7%, a growth of 130% on a YOY basis. So, overall, in a nutshell, it was a strong performance for the financial year 2025-26, with our highest revenue quarter ever in Q4 FY26. Anthem's commitment to prudent cost management and focus on long-term value creation has enabled us to expand profitability margins while delivering this revenue growth. Our EBITDA and PAD for the year grew by more than 30% in line with our growth aspirations, and we continue to maintain a healthy financial position and remain committed to delivering sustainable growth across all business segments. As we step into this financial year of 26-27, our priorities remain clear. To build one of the most Agile, science-led, and future-ready CRDMO platforms in the world. Thank you for your attention. I now open the floor for any questions and comments. Thank you.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. Our first question comes from the line of Bansi Desai with JP Morgan. Please go ahead.

Yeah, hi. Thanks for taking my question, and congrats on good finish to the year. So as we step in fiscal 27, you know, how should we think about the growth for, you know, CRDMO business, both for research and, you know, development and manufacturing, both these pieces? Also, you know, if you could comment on, you know, for our key products where we had witnessed some destocking impact in fiscal 26, you know, are those largely sorted now? You know, should we see, you know, growth coming back on those molecules as we, you know, move ahead?

Yeah. Well, thanks, Vansi. Just an overall comment. When we look at the future, if you look at our history as well, if you look at our track record, we have delivered growth in the vicinity of 20% and more, and that's what we aspire to, even in the coming years. And so it is for us, we believe that we are in a good place to align with what we have done in the past. But of course, that remains to be seen. But we are very confident of our growth trajectory in this year and the years to come. On the question of de-stocking, you know, that part, that portion, there was definitely that with our customers, from many of our customers, but you have seen that in spite of that, we have delivered such good growth. So going forward, when things get better and when this situation of de-stocking now swings to re-stocking, I think Anthem would be even in a better place. So, again, I think mostly it's behind us, and we expect that this will have a very positive impact on Anthem's top line and bottom line.

Benthi, I just want to add something over here. Historically, if you look at it, last 10 years, our revenue growth has been around 20% level. Even when we started last year, we said that we were delivering about 20%, but then we course corrected and then we delivered about 15% revenue growth. While we had said 20% on revenues and 20% on EBITDA and PAC, whatever was the shortfall on revenues, we more than made up with respect to our EBITDA and PAC performance, with a 30% EBITDA growth and 30% plus PAC growth for FI 2526. So, you know, our aspirations are quite high. What we have delivered in the past, we, you know, historically, over a long-term period, and we are not talking about a near-term FI27 or a near-term, you know, two years, one year or a two-year kind of a period. We want to refrain from giving any guidance for, you know, FI27 or FI28, but long-term, have we put in the ingredients from a growth point of view? I say that the answer is yes. We're investing in people. We're investing in our facilities. We're investing in technology. And all of this is also seen by our customers. Customers do like us. We are getting more and more projects as well. Our commercial portfolio has increased. Our other portfolio from a late-stage point of view has also gone up. So all the ingredients are there. I would refrain from giving a forward-looking FI27 or a near-term guidance, but our thought process is to deliver on what we have delivered in the past across all parameters. Last year, we missed out on one parameter, but more than compensated on the two parameters on Vista and Pact. But we will continue to do our best to deliver going forward across all parameters from a growth and profitability point of view.

No, thanks and appreciate that. My second question is, you know, also in terms of how do we from here on intend to augment our, you know, relationship with, you know, more innovators. So, I know we've got very strong relationship with probably three of the top 20 big pharma. We've added probably two more there. So, you know, as we move along, you know, what probably, you know, the initiatives that you've been taking, you know, so that we probably have, we see broadening, you know, of our footprint with, you know, more innovators, large innovators. And secondly, on capacities, you know, do you think this is constrained by, you know, our capacity? And therefore, as we move along over the next two years, when more capacity comes online, you know, we should see, you know, broadening of our relationship with more big farmers.

Well, yeah, it is already, as you rightly said, and there have been two notable additions last year in Big Pharma, which we didn't have earlier. We expect those relations to, and these were done directly, okay? A lot of our relationship with Big Pharma have come to acquisitions of the biotechs that we've been working with, and when they get acquired, we, as I've said, we move into working with Big Pharma, and then once we're in there, we try to broaden our relationship in other parts of their business. However, now they've been, last year we've had two direct contacts and two direct relationships, which are now, I'm glad to say, growing healthily. And we expect that, you know, as... See, this is not like flipping a switch. Your customers will have to build confidence in you, and they will slowly start giving you more and more exposure to their business, so a larger contract. And I think we've already done that, the initial part, and we expect that we will see a bigger part of their pie in the years ahead. That's one. Secondly, a lot of our new programs, we have at this moment about 10 programs in the phase three in small biotechs, and it's... Historically, they always get acquired. So once they get acquired by Big Pharma, we expect that our relationship will now be with new Big Pharma. So I think we're in a good place. More than 100 projects we're doing in R&D in early stages, and 10 of them are in phase three. So we are in a good place, I think, to add more Big Pharma customers to our portfolio.

And the point which you had asked on capacity, I don't see with the capacity additions that we have made in the last financial year with respect to unit two expansion and also unit three commissioning. We have a decent headroom right now, which we can use up till that time our unit four comes up, both on chemistry and biology. So capacity will not be a constraint. And in unit 2 expansion that we made that added significant capacity, we moved up from 270 kiloliters in unit, 246 kiloliters in unit 2 to almost about... So, it's a 50% addition. Unit 3 is also fully up and running right now. So, capacity will not be a constraint. What we are doing in Unit 4 is more to make ourselves future ready so that whenever the capacity comes up for Unit 4 and there are more programs coming in from early stage biotech innovators or from Big Pharma, we have the wherewithal to be able to service them. So, capacity is not a constraint for us now.

All right. Thank you.

Thank you. The next question comes from the line of Sain Mukherjee with Nomura Holdings. Please go ahead.

Yeah, thank you for taking my question, sir. Sir, one question, you know, you mentioned about, you know, you're trying to make the business more agile, you know, future-ready CRDM or platform. In that context, what are the big missing pieces that you would like to address? Let's say over the next two, three years, either organically or even inorganic as part of the plans, whether in India or even outside India, you know, given the current geopolitical situation, and you're expanding, you know, customer relationships.

Yeah, thanks, Ayaan. And again, In terms of becoming more agile and more ready, science-led, and be ready for our customers, what Anthem is doing is investing in technology. Though we do have, you know, if you look at our factories, we do have traditional bioreactors and bioreactors. But at the same time, we are also investing heavily in changing the way chemistry is done. So we are looking at, and also biology, can we do this in a continuous fashion? Can we change it to using, you know, bringing better automation and control? Can we also do, you know, more green chemistry? All of this at a commercial scale. So, where we have the advantages that when we look at a program, we look at it very early in its... And so when an early program comes in, you can implement all these so that when it goes to the regulators, you've already implemented these new technologies. That puts us in a place where we have, obviously, the respect of the customer, but also the regulators love better control, more green chemistry, and at the same time, you know, delivering higher quality, as a result of all these better controls. So the emphasis on technology will remain, and this is not just limited to what we have already told everybody. We are adding new aspects to this technology, and as in when you visit Anthem, you will be able to see those in action. So this is the first part. Secondly, in terms of acquisitions and growth, I mean, apart from our organic growth, which is also substantive, we are not averse to looking at acquisitions, both in India and abroad. We are actively searching. Unfortunately, we haven't come across the right candidate, and I've said this ad nauseum, and I'll repeat it again. We will not do an acquisition for the sake of an acquisition. It has to make sense, and it has to be the right asset. So we're always scouting for such targets, but once they come along, only then at the right one there, we'll make that call. This is, you know, to answer, we will drive our business to technology.

Understood. Just one more question on KPEX. You know, if we can talk about your KPEX number for next year as you're expanding the new unit, and also slightly medium-term KPEX outlook, let's say, over the next three, four years, if you can write for that.

Sure. So, Sain, in terms of a CAPEX plan, the first and major CAPEX what we are incurring right now is on Unit 4. Unit 4, we have articulated that this is going to be our largest project. Unit 1, 2, and 3 put together, Unit 4 is going to be much larger than all of the units put together. So, it's a 30-acre piece of land, and all our Unit 1, 2, and 3 put together is close to about 30 acres. So, in phase one of that expansion, we are looking at adding and we are looking at investing almost about 1,200-odd crores across two years, this year, FI27, and in FI28, we aim to complete the phase one expansion by March 28 financial year, towards the later half of March 28. This will add close to about 365 kilolitres of custom synthesis capacity and 100 kilolitres of fermentation. Vis-a-vis, our current capacity is 425 kilolitres custom synthesis and 180 kilolitres fermentation. So we are more or less doubling on custom synthesis and adding 50% more on the fermentation side. So, that's on Unit 4. We'll be completing a few expansions, which is ongoing, you know, more on Unit 2 and Unit 3, which is lying as CWIP in our books in this half year of FI 27. But largely, medium term, if you look at it, it's going to be Unit 4, which will be driving the major part of it. Just to add, We still have two more phases to be done with respect to Unit 4. That we will take it up once Phase 1 gets completed, and that will be post March 28. But the aspirations are huge over there so that we can build a much larger facility, which will, in Phase 1, at least double. In Phase 2, it could be triple of our overall size, from an overall capacity size point of view.

Understood. This is a clarification. So, next year, your CAPEX will be north of 600 plus, right?

Yes.

Would that be a right assessment? So, can you get 600 plus from residual CAPEX plus maintenance CAPEX? So, what would be the number we should go up with next year?

Roughly about 700, and then post that will be about 500.

Okay. Thank you. Yeah. Thank you.

Thank you. We are investing for the future.

Yeah.

Thank you. The next question comes from the line of Debanjan Bhakta with Universal Sompo General Insurance. Please go ahead.

Yeah, thank you for the opportunity. Any other?

Yes, Debanjan, please be a little louder though.

Thank you. Okay. I want to give you some color on the product side. I guess there are some new orders coming on the new RSQs. What modalities are they coming in? Like, are they biological entities or the chemical entities?

Sorry, Devanjan, I didn't catch that question. Can you just repeat the question?

Like, the orders that you are seeing, the new orders that you are seeing from Ingrid, are they coming in the biological entity modalities or chemical entity modalities?

Both, both, and I would say that across both custom synthesis side and biology side, plus on the advanced technologies on the custom synthesis, more on the peptides or on the RNAi side, they're getting more and more orders there.

Okay, and the question is, what payload are we developing in the ADC platform? What type of project? What type of failure are we developing in the ADC platform?

I mean, I'm not at a liberty to disclose those. Those are confidential work that we do for our clients, but we do a variety of payloads. At least, I think, 15, 20 payloads we work on, depending on what our clients want, and some of them are proprietary. So, that's a very interesting area, and we have a huge amount of activity going on there. I'm sorry, I won't be able to give up the name of the payloads.

Okay, last question. I'm going to talk about the current manufacturing revenue, how much is coming from biologists and how much is it coming from the clinical entity? The current manufacturing revenue.

So a larger portion of it is from custom synthesis. But see, Dibanjan, a lot of work includes enzymatic work. There is a lot of peptides work which gets done. A lot of work on the RNAi side. Even in custom synthesis, on some of the areas we use biotransformation. So it's very difficult to articulate and differentiate saying that this is pure play biology and this is pure play custom synthesis. But the sizeable portion of our work comes from the NC molecule side, on the custom synthesis side.

Thank you. Thank you.

Thank you. The next question comes from the line of Vivek Gautam with GS Investment. Please go ahead.

Congratulations, sir, for your set of numbers. And, sir, my question is, any risk of stocking, stocking, inventory, etc. in our company? And in GLP-1, basically, how is the opportunity size for us and overall opportunity size for us in an expected growth rate for next two years and differentiated for our tongue-meter. Thank you.

Okay, to answer the first question, the destocking that had to happen has already happened. So this year, everything will be in the positive territory. So they are restocking now. So that part is behind us. And the second part is on the question of GLP-1. We are in – see, if you follow the GLP approvals in India, most of them have their – The active is from China, and now we are in conversation with, I would say, all the big players to give them an alternate, which is based here in India. So we're in a very good position as far as GLP-1 goes, but this will be the ender. Most of them have launched, and so we will be in a good place to replace imports, and that is a position that we've always been strong in. The third question was on.

Differentiator for our company and opportunity size and accepted road rate for the next few years.

So, historically, we've grown upwards of 20%, and we feel confident that this is what we want to maintain. However, as I say, we don't give forward-looking guidance, so I would not be able to give a number. But, you know, we do aspire to the growth that we have maintained so far, and everything, as far as Anthem is concerned, is aligned to give you that growth rate. And in terms of... What differentiates us? I think it starts at the very, very basic thing. We are very different from our peers in India. We are more focused on small biotechs, and therefore we are more on the discovery side rather than the full-time equivalent type of business. What we differentiate ourselves is by technology as well. I think in that we have no peers in the country. We absolutely approach every problem from a new technology solution and which our clients love. I think that gives us a lot of visibility and traction with our clients. The third part that differentiates is our culture, as well as the, you know, a very large number of our – hello? A very large number of our employees are on our ESOP plan, 40% at the time of announcing stock options. So, we have a very young, energized workforce which wants to see the company grow, and I think are really making that difference.

Yeah, yeah.

So, any risk of AI in the discovery stage where we are focused? Yeah, see, AI is coming into all kinds of functions of the company. It starts with recruitment, with HR, with warehousing. So we are trying to bring in, you know, there's a lot of hype of AI, but you have to pick up the use cases and implement them case by case as they are relevant to you. So it's not some overarching thing that you can say, I have not put the company on AI. It has to be in the areas where it is relevant. So it's a work in progress. We are constantly exploring that.

Thank you, sir.

The next question comes from the line of Vivek Rakolia with FinCom Family Office. Please go ahead.

Very good morning. Am I audible?

Yeah, very good.

Thanks a lot for the opportunity, and apologies in advance of my questions. I'm very basic. I'm very new to the company. I wanted to understand firstly, on the peptide front, A listed peer claims to have also developed the capability of making the full peptide chain, right, from fragments to the APIs. And they have even started expanding their capacity for the same. How do you see this development and what would be your strategy to differentiate against the competition, domestic and international?

Okay, listen, for instance, when you... Okay, this is not a science lesson, but when you say peptide, peptide is like saying an organic molecule. So they are very different type of peptides, and it's a full body of chemistry by themselves. There is many ways to make, depending on the peptide that is of interest, you can make different fragments and do convergent synthesis, Or you can do even serially, step-by-step, or you can do partly by fermentation and partly by synthesis and then do what's called biosynthesis. So there are all kinds of ways of doing it. So depending on the peptide in question, we have seven or eight or even more than that, 10, 12 peptides which we are working on. So each of them follow a different strategy. It depends on the structure and the way it has to be built. So I won't have an answer which is, you know, to give you a very generic answer, how are we doing this? We, again, when we look at a problem, we look at what is the most optimal solution in terms of economics. So we approach the problem from that side, which, therefore, our aim is always to get the best cost of goods. As to your other thing that, you know, the other question that somebody is doing all this assembly of a peptide right from beginning, so is Anthem. So, I mean, I'm not privy to what they are doing, but Anthem is in a very, very good place as far as GLP-1 type of peptides are concerned. I believe that we have... The extremely competitive cost of goods are rivaling even the Chinese. So, I think we're in a good place there. We're very competitive.

Great. Thanks a lot for that answer. And next was also just... Stepping back in terms of molecules and complexities, would it be the correct understanding that the TAM of peptide is larger than that of oligonucleotides? And also just wanted to confirm between, say, peptide oligonucleotides and ADCs. How would you rank yourself on the basis of the complexity of the subject that you work with, your capability, of course, and the TAM of these areas, and competition, if you can explore these areas of these three molecules and modalities?

Okay, you know, you're asking a very fundamental question. Right now, Perteg is the most successful commercial molecule, so in terms of TAM, they would be the biggest. For some applications, so there you'll need a CDC, and that's a very big area of growth in the pharma industry. And then again, when you bring all your oligonucleotides, they are everywhere again. So Anthem has capability to work in all these areas, and that is something which is – because these are the new modalities, and these are new areas of research, and as I said, Anthem addresses all its addresses. All the problems, you know, find solutions, technological solutions. So we are present in these three modalities. in a very strong way. I mean, it'd be unfair to compare ADC versus peptide versus... They all do specific jobs, and they're designed for that. The idea is to, you know, get to the patient the right treatment. So Anthem is present in all of them. As far as market is concerned, given the very large nature of, you know... The diabetes as well as obesity. Right now, peptides are the largest sales, you know, and in the foreseeable future, that's what it looks like.

Great. Thanks a lot for your answers. All the very best. Thank you.

Thank you.

The next question comes from the line of Dhavalkut with Jefferies. Please go ahead.

Hi, thanks for taking my question. I wanted to understand what steps are we taking to build a pipeline even in large molecules? And, you know, wanted to delve deeper into the BD side of large molecules, like how willing are innovators to give their projects to Indian CRDMO? How easy or difficult is it to bring those early stage molecules in the country versus, let's say, you know, the willingness in small molecules? And does India have any cost-benefit advantage versus Korea or China? Because, you know, CRDMO from those regions claim that in large molecules there is no cost difference, their yields are extremely high. So I just wanted to get thoughts around the large-molecule CRDMO space. That's my first question.

Okay. Thanks, Tawal. See, Anthem is, as I said, we are focused equally, and not all our peers in India, at least, are. We are focused very well on biology as well as chemistry. So we're making investments in this space as well so that we can do large molecule manufacture. And we are working with about four or five projects where we would be the development partner and hopefully then the manufacturing partner in large molecules. To answer your question about how willing they are, they have no problem. Most of the people, most of the customers we work with, they don't see a problem of coming to India. The problem, if it is any, lies in their capacities. So the Koreans, in particular in China also, and the large companies, have built up massive capacities. So in that sense, they tend to be, they are ahead of us. There's no denying that. Because the upfront investment in large molecules is quite large, so you have to be willing to invest billions of dollars for those kind of capacities, which some of the players in Korea and China have done that. Second part, that... What is Anthem doing to get people on board? Again, we plug away at this because I think in terms of early development, Anthem is a very, very good partner, and if you have early development, at least in biologics, the chances are that you can retain the project because you would know more about it than anybody else, and they would not like to transfer out when all the regulatory work has also been done at Anthem. So our strategy is a little different. It has to be. We can't go in there, you know, like Cellfion or Samsung and say, give us a project, or even Lonza, a ready-made project, because they have the capacity to support it. But, you know, all Indian companies are in the same position. Biosimilars, India is already making a dent. So in novel molecules also, it is in the same position that we were in small molecules, let's say, 20, 25 years ago in NCEs. And I think it's a very good place because now the barriers of, mental barriers of giving work to India are not there. So the more we invest, which we are, the more we will see projects coming our way.

Got this very helpful commentary. Secondly, just wanted to get the update on the biosimilar asset that we are working on. How's the progress going on? And eventually when things will hit our P&L, we'll put it under the CRDMO category or will it fall under the specialty ingredients?

That's going really well. That project is well on its way, and I think, as you know, there's a process of doing this. It has to be refiled, three batches. All that is going on now, and typically the lead times in approval of another site tends to be one year or so. I think it will hit our P&L next year. Where will we classify it? I think it will go in CRDMO.

Thank you, sir. I have more questions. I'll join back the clip.

Yeah, thanks, sir.

A reminder to all participants, you may press star and want to ask a question. The next question comes from the line of Ashish with UTI. Please go ahead.

Yeah, thanks for the opportunity. If you could also talk about specialty ingredient, what is the kind of order book that we are dealing with right now? Because is this segment currently a victim of de-stocking, as we can see in the revenue growth numbers?

With respect to speciality ingredients, the nature of the business is slightly different. We are dealing with... Hi, can you hear me? There's a little bit of a background on it. So we're dealing with products like the ratio peptides, vitamins, probiotics, enzymes, all of these products which we are dealing and that is more catered towards the India and ROW markets. We are also looking at getting these products filed for some of the developed markets as well. So these are products, our own products, where we are selling to multiple customers. So it's slightly different than the CDMO business where you're working with the innovators one-on-one and, you know, where there is dedicated manufacturing, which we do for some of the customers, and we get order book from them, and there's a significant, large, deep time in terms of supplying those molecules, and hence you have order book right at the very beginning of the year for, you know, six months down the line. Speciality ingredients has been a flow business for us. And if you look at speciality ingredients, I just want to add over there. Last year was towards the first three quarters of the year was a little bit flat for us. But we have started increasing revenues in speciality ingredients from the fourth quarter onwards. We delivered about 8% growth on the fourth quarter. And we would aspire to grow that business also in a similar growth trajectory as what we are looking at growing for us. We don't have an order book sort of a concept in specialty ingredients because we manufacture and then we try to sell to the customers who are already taking the product across multiple geographies and across multiple product categories.

We are very confident now we are also adding in a unit for a dedicated food facility, so this is something which has been lacking. What has been happening is one reason why the growth tends to be a little patchy there is that we have the same facilities for speciality ingredients and our CDMO business, NCE business. So sometimes when the project is, when we get new projects in that area for CRDMO, we tend to, you know, give less importance to the speciality ingredients business. So it tends to be some of the capacities get cannibalized by our CRDMO business. So that's one reason why they're not able to really see the growth. But now we're investing in a separate facility, and that will help us a lot in the future.

Okay, so given that some part of the gross block is actually fungible, how do you maintain margins then? Is there an aspiration? Because you have spoken about the revenue as growth aspiration. Anything on the EBITDA margin side you would like to comment on?

So, our aspirations across all the parameters, whether it is revenue, EBITDA, or PAT, is the same. If we continue to grow our business in a particular growth rate, our costs are also escalating in a similar sort of a growth rate. With a little bit of an operating leverage, we'll be able to keep our margins constant and continue to have witnessed a similar growth trajectory in EBITDA as well as in a PAT terms.

Okay, so 38-40% EBITDA margin is a fair number to assume?

We've delivered so far, and we'll continue to deliver those numbers going forward as well.

Okay, and lastly, on the headwind side, at least for our business, you do not see any risk emanating from the tariff situation, right?

No, tariffs is not a problem because most of the big pharma that we work with already have separate deals with the administration in the U.S. The second part is this is, I think, You know, these are very difficult times to predict what will happen in terms of headwinds. Nobody anticipated a war in the Middle East. There are so many things which are up in the air. In spite of that, Anthem has grown, and grown really well, and I don't see why we couldn't do that. But these are times where there are inflationary pressures. Let's not – we all know that. We can see it. At the same time, we also know that what will deliver the goods is our technology platforms, and we believe that we'll be able to maintain both growth and profitability.

That's very helpful. Thanks and all the best.

Yeah, thank you. The next question comes from the line of Sain Mukherjee with Nomura Holdings. Please go ahead.

Yeah, thank you for the follow-up. Here is one question. You know, Anthem today is still a very small company, you know, compared to many global peers. And you have... Sort of a very cohesive unit, high-quality service. It's also reflected in, you know, steady growth and also very high profit margins and profitability. Now, if you look forward over the next four or five years, even if you grow at like 20%, maybe, you know, your scale will double or maybe triple. And if you add inorganic, it could sort of become even larger. Your comments do suggest that we are at an infection point where, you know, CRDM on India is accepted. Also, Anthem as a company is gaining traction with Big Pharma. So, think that the opportunities can come your way, you know, at a much faster pace, and that would require you to sort of grow much bigger than, or much faster than what you have grown in the past. You know, that would also sort of probably present some challenges on execution and profitability. How are you, I mean, have you envisioned like Anthem from a five, seven-year perspective, slightly longer term kind of aspiration you have? And, you know, these levels of profitability, can it sustain? Because it's already very high compared to anyone else in the industry.

Yeah, so... Yeah, we have envisioned five to seven years of growth. As we said, we are investing such a large amount in Unit 4. By the time that comes in, gets filled up, the capacity of Unit 4 is going to be greater than all our units put together. So, yes, there are much bigger players out there, but, you know, we've also had the fastest growth rate among all our peers. So, we don't see that, you know, at the end of the day, it is about your growth rather than worrying about what other size is, right? Somebody can have a bigger company, but we are growing faster than most. That's one thing. Secondly, yes, we are investing in the future, and if we weren't looking at five years ahead, why would we be investing such a large amount of money? The third thing about acquisitions and growth in terms of getting into an inorganic growth situation, yes, we are very keen on that, and if we get something which is the right quality and the right geography, we will definitely go for it. So there is no doubt about it that we are looking at all possibilities, and our cash situation allows us to be flexible. We can look at these possibilities, and you're absolutely right. Our margins are really, really high, and just to maintain them would be a human task, but I think we're equal to it, and we believe we can maintain them, but we really want to grow them as well. So we are better than our peers in growth, in terms of our growth, in terms of our margin, and we intend to stay there.

Okay, sir. Thank you.

Thank you. The next question comes from the line of Amai Chalki with JM Financial Services. Please go ahead. Amaisa, please go ahead with your question and unmute your line in case if you are on mute.

Sure. Thank you for giving me the opportunity. I have a first question on CRO, how it has done during the year and the quarter, and if we can provide the breakup. Also, along with that, the GMs have gone up over the last one year, as well as this quarter or the second half. It is consistently above 65%. Is it contributed by the higher CRO mix, and what is our report? Thanks.

I mean, with respect to the gross margins, we had articulated this, that for one of the intermediates where we were outsourcing it and we were not completely backward integrated, we became backward integrated during the course of last year, and it started showing in the gross margins with respect to the material margin movement. And that integration is complete. We source the raw material, manufacture the intermediates, we manufacture the API and supply to the customer, so we are not reliant on any external source. So that backward integration has helped us in terms of improving our material margins, which has moved up over Q3 and Q4 of last year. Now, in terms of the split of revenues, a large portion of our business still comes from commercial molecules. And in the course of last year, we had four molecules which went commercial, so our commercial pipeline increased to 14. On the late-stage side, we had 10 at the beginning of the year. We got four of them moved towards commercial, but we also added a few more molecules in the late-stage pipeline, and now the late-stage pipeline stands at 10 phase III molecules. And along with that, we work on 100-plus programs on the early-stage side. So the development and manufacturing batches, what we supply for some of these early-stage, late-stage molecules is roughly about 15% of our revenues. Commercial is about 60%, 60% and 14%. R&D is about 8% to 9% of our business. And the balance is speciality ingredients. Speciality ingredients is about 17% of our business. That's the breakdown.

Sure, sure. Thank you so much. And the one question I have for Ajay. So, like, CRO, AI companies are also started coming in in the U.S. market, although we are, fortunately, more manufacturing company. But how do you see this AI evolution in the CRDMO space, and do you think that there is any space for this AI coming into the manufacturing side of it, which can be a material advantage on the AI?

Okay, what we hear is that discovery, it will be a big aid in discovery, which is identification of molecules given a particular target. It will do it far faster, better. We also hear that it will give us many more optimized routes of manufacture. So there AI will definitely play a part, I'm pretty sure of that. But in the end of the day, somebody has to, you know, Get into the plant and manufacture, and that's 83 percent of our business. I mean, it's a very high percentage of our business. So we are, I think, going to be, we feel we are a little protected. Manufacturing still has to be done. But there are areas where it will start to, you still will start to optimize your thing. You will be able to optimize your plants better with better use of AI. That will only help us, and that will help us improve our margins, hopefully. So I don't have a clear-cut answer to it, but there will be portions of your business which will benefit from it. And I think we'll implement it depending on case-by-case as to where we see the maximum benefit and implement AI there. Overall, a company which has to be AI-ready, it's not a catch-all, but it will solve certain problems better than people can, and I think that's something that we are definitely looking for.

Sure. Just last question, if I can. Like, on GLP-1, when is the commercialization is expected on the generic side of it? And can it be a material segment for us going ahead? Thank you so much.

Looking into the future, it will be a big contributor. I'm pretty sure of it. At the same time, you know, all our customers are working on... Their new formulation with our material, so it also depends on when they can get approval and when we can get approval to launch it, so I think it's just sitting there, otherwise we are in a good place. That could happen in six months, it could happen in eight months, but I think we are there.

Sure, sir. Thank you so much.

I would like to thank you. The next question comes from the line of Dhawal Khut with Jeffrey's Group. Please go ahead.

Thanks for the follow up. I just wanted some more color on the phase three molecule pipeline that we have. Two parts to it. So on the first part, you know, the recently added four molecules. So how many are lateral entry for us versus, you know, molecules coming from phase two and graduating to phase three? And secondly, can you divide this entire basket of 10 molecules into, you know, how many are big pharma versus biotech as of now, and what will be the modalities of this entire basket of 10 molecules?

So, Dabal, in terms of the additions which have happened in phase three, all of them are non-lateral. So, these are molecules where we were working with them on early phase, phase two, and then move to phase three, okay? All of them are emerging biotech, so it has come from our entire biotech funnel where we work right from discovery, development, supplying them the small quantities, and then as their quantities progress, and as the product moves from phase one to phase two, they have moved to phase three. It's a good mix of molecules which are on ADC side. It's a good mix of molecules. We have some molecules where we also do biotransformation, and that has also moved on phase three. So I won't say that it's more dominated towards one particular therapeutic category or one particular technology category. It's a good mix across all the spectrum of ADC peptides or oligos, et cetera, work, what we do, and everything coming from the emerging biotech customer.

Okay, so this basket of 10 is a mix across, you know, different technologies that you have. Is that a fair understanding, right? At least you have one molecule in each of them. Okay, got it. Lastly, is the U.S. pharma tariff creating any challenges in terms of business development, you know, especially with the U.S. customers? Or you think the customers are also taking it with a bit of a pinch of salt because there's a lot of to and fro, the clarity is not there, and they are planning for long term.

No, it hasn't had any impact on us. And if you look at the nature of our business, most of our commercial products are with the big pharma, and they have entered into separate arrangements with respect to the tariff part with the administration. The early stage biotech cluster for us is still in the early development or in the late development stage. So they are still in the drug candidates category for us. So, it's not... At least till now, we haven't had any impact with respect to the tariff announcements.

And your point is a good point that, you know, I think the biotechs are taking this with equanimity. There's, you know, as you yourself said, there's so much back and forth. Nobody is very clear what the intent is. It seems to be the intent is very undefined, and in the long run, it doesn't really matter. That's how people have taken this view now. That, you know, directionally, India and China, I mean, sorry, India and America are on the same side. So I think everybody is okay with it.

Thank you. Ladies and gentlemen, in the interest of time, we will take the last question from Udit Bokaria with Catamaran. Please go ahead.

Thank you for giving the opportunity. Sir, just wanted to...

I am sorry to interrupt, Udit. Please be a little louder. Thank you.

Hello. Yeah. Yes, please go ahead. Thanks for the opportunity. Just wanted to understand a few of the commercial molecules which we were working with biotic companies were acquired by Large Hama. And you had mentioned in the past that they are yet to be launched commercially by the big pharma because they were still doing some assessment, right? So when do we expect that to be launched? That's the first question. And the second question, if you can share what your U.S. biotech partner is talking about now, biotech funding environment, and are you seeing increase in the inquiries?

Yeah, so I'll take on the biotech funding side. Biotech funding has been recovering and I think Till about April, the four months, it's gone up by about 50 odd percent year on year. So, there's a recovery which has happened on the biotech funding side. And we're also seeing that with respect to the request which is coming in on the early stage development projects, while the projects are smaller in size, but the number of requests which is coming in is increasing. So, biotech funding is not a... Not a side of concern for us. Now, with respect to the commercial molecule questions which you had asked for us, the last four molecules which went from our phase 3 pipeline to commercial last year, one of them was with a big pharma, the rest three were with the emerging biotech customers, and they have launched the product in the market, maybe towards the end of the year, some maybe towards the middle of the year, so it's launched, but the ramp-up will take some time. They are still in the early phase of their launch in the market.

And how should one read, like, from the customer indication, when can we expect the ramp from happening for these products?

It takes two to three years to have the ramp up, because we might have mentioned the peak sales estimates of the four commercial molecules which went commercial last year. But that peak sales estimates is typically from the analysts are four to five years from the launch date. So it will take some time to launch because they will be looking at launching this molecule in one geography, then they are looking at filing through registrations in other geographies and launching it. With respect to registrations, also it will take some time. So it will be two to three years for the molecules to see that ramp up happen and the overall sales.

So the current contribution from these four molecules would be like less than 5% or 2%, like meaningless?

Not really, not really, because they have launched it in the market, so they have taken launch quantities from us. Ballpark, the current contribution from these four molecules will be in the range of closer to about 8% to 9% of our revenues. So when I talked about commercial molecules being about 60% of our revenues, 8 odd percentage call-park will be from those new molecules which had been launched.

So there's a lot of headroom to grow.

And just back on the biotech funding part, so in terms of our capacity to handle number of projects, right, currently we are doing 100 projects, so how should we think, like, what is the peak capacity of inquiries that we can handle, and how are we ramping that up?

As you said, we have invested NeoAnthem, our Unit 3, which is where we have put in a lot of labs, so we can handle many more projects. But I must also tell you, these projects come in different slices, right? It is not that everything comes at one go. So out of these 100 projects, some would be at the early stage of this development of the chemistry. Some would be at a stage of optimizing that chemistry, and then another would be how we can... How we can get a commercial optimization of the process. So, when there are so many aspects to it, it is not, we have different teams to address that. So, at any given time, we can handle a lot of projects. It's not that we are constrained by that. But you're right, you need more and more labs, and that's what we built in Unit 3. So, if the projects go to 200, we'll be fine. We'll be able to handle that.

Thank you. Ladies and gentlemen, that brings us to the end of the question and answer session. I would now like to hand the conference over to the management for the closing remarks.

Okay. Well, first of all, thank you, everyone, for attending this. And as we have said, we will continue to be – our aspiration is to be the most admired. The most agile and the one CECR DMO that follows the best practices around the world. Our customers have shown their trust in us by being very sticky. We have very long-term relationships with most of our customers, which is yielding us very good results. And going forward, I expect that to remain, and we are very confident about the future. The investments that we have made will start to add different. Unit 3 is already turning around, and it's going to be in the positive territory this year. Unit 4 will be ready by the next financial year. And so we are in a very good place to become the leading CRDMO out of our country. And, you know, after that, the sky is the limit. Thank you for your confidence in us, and we will work very hard to honor that confidence. Thank you very much.

Thank you, everyone.

Thank you, sir. Ladies and gentlemen, on behalf of GM Financial Institution Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.