Anthem Biosciences Limited (ANTHEM) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good and welcome to Anthem Biosciences Limited Q1F527 earnings conference call. As a reminder, all participant lines will be in the lesson 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 and zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Ms. Forum Gosher from AdFactors PR. Thank you and over to you, Ms. Gosher.

Good morning, everyone. I am Poram Gosher from AdFactors PR Invest Relations. On behalf of Anthem Biosciences Limited, it is my pleasure to welcome you all to the Q1 FY27 Earnings Conference Call. Joining us on the call today from the management team are Mr. Ajay Bhardavaj, Managing Director and Chief Executive Officer, and Mr. Gavit Dey, Chief Financial Officer. We will begin today's call with opening remarks from the management, following which we will open the floor for question and answer session. Before we begin, I would like to remind everyone that certain statements made during this call may be forward-looking in nature. These statements are based on the management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Anthem Biosciences Limited undertakes no obligation to publicly update or revise any forward-looking statements based on subsequent events or developments. With that, I would like to now hand over the call to Mr. Ajay Bhartawash to deliver his opening remarks. Thank you and over to you, sir.

Thank you. Good morning, everyone. This is Ajay Bharadwaj. I am pleased to announce our first quarter results for the financial year FY27. Our consolidated revenues from operations for the quarter were 418 crore rupees, out of which the CRDMO business contributed 81.5% of the revenues, delivering 341 crores. Speciality ingredients contributed 18.5% of our revenues, delivering 78 crores. The EBITDA was 176 crores, including other income, with EBITDA margin at 39.6%, that is nearly 40%. The EBITDA includes other income of 25 crores. PBT was 145 crores. Our profit after tax for the quarter was 120 crores, with fat margins at 27.1%. Net cash position of the company as of June 30, 2026, was 1,720 crores. Our first quarter of FY27 results reflect timing shifts in deliveries to key customers. The underlying demand remains strong with a higher concentration of scheduled deliveries in the latter half of the year. We are positioning to capture that momentum. We remain firmly committed to sustaining revenue growth aligned with our long-term historical performance. On the margins front, we delivered year-on-year improvement across both EBITDA and FAT margins. Our disciplined focus on cost efficiencies, yield optimization, and employee productivity continues to reinforce our industry-leading margin profile, positioning us to sustain this performance throughout the year. Thank you very much. And now I get, you know, I'm open to questions. I have with me my colleague, Mr. Garvey Bay, who is our CFO. So any questions, we'll be happy to answer.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the 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. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

The first question is from the line of Sion Mukherjee from Nomura Group.

Please go ahead.

Thank you for taking my question. Can you update on the capacity utilization at Unit 1, 2 and Neo Anthem as of first quarter, and how should we think about utilization levels in these units? Change in the course of the next three years, and also any timeline with respect to regulatory inspection required for Unit 3 by US FDA or European authorities.

Thanks, Sian. See, with respect to our capacity utilization, last year, when we ended the year, roughly about unit 1 was about 74% utilized. We continue to have the same utilization in our unit 1, and even this quarter, roughly about 78% utilized right now on the custom synthesis side. Unit 2 was about 65% utilized last year for the full year because we had gone through significant expansion over there by adding about 130 kilolitres. This quarter being a slightly softer quarter, our utilization was about 50% for unit 2 across the expanded capacity on custom synthesis side. Permutation utilization is about 50% for unit 2 across that 140 kilolitres that We have in fermentation. Unit 3 has been picking up from a utilization point of view, roughly about 30 to 35% is the utilization for quarter one of Fi27. This is a ramp up from what we had about 15 odd percentage of utilization in Fi26. So there is a ramp up in Unit 3. What do we expect going forward? We expect all of these units to be completely full, and that's the reason why Unit 4 is what we are setting up. We are in the midst of construction over there, and I think by end of next year, we'll be able to commission Unit 4, which can add another 365 kilolitres of custom synthesis and 100 kilolitres of fermentation. So, in the next two years, we will look at ranking it up to almost optimum capacity utilization across all the three units.

All right. Yeah, okay. Thank you. And so just one clarification. So the increased utilization at Neo Anthem is primarily the shifting of some production from the existing units to Neo Anthem. Is that what is happening?

Some of it is that, but most of it is new orders that we are getting, because we have a very modern pilot plant there. We have also, you know, our peptide synthesis and oncology manufacturing there. So some new projects are being put into that unit now. So it is not just shifting some of it. It is mostly new projects that are coming into Unit 3.

Okay, thank you. And just one more question. In the quarter, is there any update on a new contract, new client traction, large pharma, mid-pharma, any development that you would like to share? And some of the initiatives on peptides, you can talk about any traction that you've seen over the last three months.

Yeah, so in terms of adding customers, we actually have one new Big Pharma customer which has been added. And this is, we expect that to yield significant numbers going forward. One of our large customers, biotech customer, also got acquired by Big Pharma. So that is something that we still yet to pan out. This happened very recently, maybe a month old. So, it all continues to be good, you know, and just to, again, add to your query when Garver was answering that 50% utilization of unit 2 in this quarter. And the subsequent quarters, we are very confident of having much better numbers because our customers have deferred deliveries to the quarter 2 and quarter 3 and 4. So, the capacity utilization is only going to go up. So we continue to be very bullish for the year. We have very high degree of visibility because 60% of what we need to do, we already have order book. So we are sitting on a very strong order book. That gives us the confidence that we will achieve our growths that we intended to do right at the beginning of the year.

Thank you. So just one clarification. You mentioned one new big pharma significant contribution possible. Any timeline that you have, like in how much time you will see that traction showing up in numbers?

Well, it should happen in the latter quarters of this year. The agreement hasn't yet been signed, but it's in the works, so sometimes these drag out, but the customers on board, it's just a matter of now crossing the T's and dotting the I's, and that's happening.

Okay, so this is like an existing commercial project that you would be starting to manufacture, or this is a new molecule?

It's an engagement, which is a multidimensional engagement. There's R&D, there's new projects, some products that they need, which they're sourcing from. They want to diversify their supply chain. That's going to happen as well.

Okay, understood. Thanks a lot.

Thank you. Thank you. The next question is from the line of Udit Bukhurya from Caterman. Please go ahead.

Thanks for giving the opportunity. So I just wanted to understand you and mention that we have a visibility of 60%. So usually at the start of the quarter, what is the visibility which we have for next quarter sales? And secondly, if you can just bifurcate what constitutes the remaining 40% across the, or if you can just give, what is the visibility which you get in your manufacturing business? What is the visibility which you get in your R&D business? And what is the visibility you get in your specialty ingredient business?

Well, the specialty ingredients business that we addressed at first, that's an ongoing business that's largely India-focused, so that is, you know, month on month we get orders, so some of them are, of course, long-term contracts, but this is more of a B2B business within India. When it comes to quarter-on-quarter, see, we get visibility. Some of the large customers, they give us orders for the whole year forecast. And then it's a rolling forecast, which is revised and updated every week. Three to six months. So we have a fair degree of visibility there because, you know, these need to be manufactured and there's a lot of raw materials that need to be procured. So we have that window to know that. When it comes to R&D, that is, again, whenever we sign a contract, we know that the next quarter, this is what our deliveries are, and sometimes it spills into the quarter after that also. So, generally, that's an ongoing input we get, but largely for one or two quarters, there is predictability. So, when we are going in at the beginning of the year, when we have something like 50% of next year's order book already in our hand, then we feel confident that the rest of the 50% will make up in the rest of the year. This year, after one quarter, Admittedly, it's a muted quarter. We still have 60% of our order book full. So, you know, we are very confident about what will happen for the rest of the year.

And usually the remaining portion is one through like new clients which we are onboarding, or it could be even for your existing products which you supply customers, increase the volumes like this.

So, it's usually a mix of both. You know, we still have three more quarters to go this year, and, you know, that's a long time. And we will onboard some new customers. So, that's an unknown. That should contribute at least some percentage of sales. However, some of the existing customers, like very recently, one of our customers came back and said, can you supply us extra material this year? And we said, yes, we could. And so that PO got factored in. And additionally, there is, you know, also in terms of sometimes the projects in the biotech customers that we have get very healthy clinical outcomes, and suddenly there's a new order that they need because they need to do the next phase. So it's a mix of both. There's no, you know, there's no one suit that fits all, not one size that fits all. But yeah, all of them are happening at the same time.

So, just to clarify over here, the order book that we are talking is largely for the CRDMA business, because speciality ingredients is a normal day-to-day, month-on-month business, which needs to be delivered. So, the order book concept is largely because for CRDMA business, we need to procure the raw materials and manufacture it. So, there's a need time in terms of manufacturing it and also procuring the raw materials, and hence we get orders in advance. So, when we started of the year, we were with about 60% of the order book for the full-year delivery and now, even after quarter one, we have replenished the order book. So, even right now, also, we stand with about 60% of the order book still being there.

And this 60% visibility which you mentioned is only for the CRDMO segment or this, when we say this is for the whole business?

So when I talk about 60% as a number, as a fraction, that is for the whole business.

Whole business, understood. Thanks a lot. And my second question, sir, we had highlighted that we are, like last year also, we had on-boarded two new big parma as clients, and current year also, as you mentioned, we have on-boarded another big parma as a client. So I just wanted to understand where are we currently in terms of discussion for some of lateral projects or already commercialized molecules and what stage, like have they already audited and have we already signed contracts and when can we see those translating into orders?

Yeah, so when we onboard a new customer, there are two ways it's done. One is they acquire an existing asset that we've been working on. So largely they leave the team untouched for a year or two years because it's something that, you know, it's a new acquisition for them. So it remains business as usual for some time. Then, the lateral entry, we get, we are now in a, you know, only early this month, we got some new inquiries of existing products for our big pharma customer with whom we are doing fairly good business. Now, that's something we still have to win, but, you know, the fact that they are sending us these inquiries itself means that, you know, we have established more than just a toehold in these companies. Also, we are, you know, as I said, for one of the customers we onboarded last quarter, they are giving us advanced, you know, their registered starting materials and some advanced intermediate inquiries. So, again, those are some of the numbers have already kicked in, but it's just the beginning. You see, these relationships are, they span, they have a time frame of maturing over three or four years. So, just on a quarter basis, it can be just, you know, a start, and it's like warming up the car, but we have miles to go, and that will happen in the subsequent quarter and subsequent years. Every time we enroll a customer, these relationships are For years, you know, and that's been our experience, and so every time we bring on board a new customer, it gives us a lot of hope that this is now going to span over many years of contribution.

So, just one last question, just one way to understand. So, a lot of biologic drugs are going off patent. So, do we plan to be a drug substance supplier as these products go off patent to any of the companies which are looking to commercialize it?

Well, we do have some of those, absolutely. But, you know, this is not a strategy that we look at the products which are going off patent and we start working on them. See, generally, that becomes part of the generics business, though it's a biosimilar generics, but we are, we've stayed away. But there are customers who approach us. See, for ADCs, they need already established MAPs, which have gone off patent, or something like that. Those projects we work on, or something which the client will come to us and say, we need this biosimilar, would you develop it for us and manufacture it? Those interest us a lot. We have, as of now, and I'm not saying it's never going to happen, peptides is another area. These are also large molecules. There we work with customers, and we also have our own strategy there. But generally speaking, we don't follow the patent expiry list.

Thanks a lot, sir.

Thank you.

Participants who wish to ask questions may press star and 1 at this time. The next question is from the line of Mayholzade from HDFC Securities. Please go ahead.

Yes, thank you for the opportunity. So, first question is around like on your pipeline and late phase molecules. So, as of now, we have something like 800 plus kind of active projects plus 10 molecules are in late phase. So, can you give some highlight that how many of these projects are into like a space of we can say a GLP or ADC kind of a segment and any near-term visibility in terms of commercialization?

Thanks, Meval. Yes, right now we have about 100 plus programs which are in early stage development and 10 on the late phase side. Pass-through commercialization will still be some time away, closer to about 18 to 24 months. Last year, we have commercialized four, customers have commercialized four new molecules. So, we hope that some of these 10, which are in the late phase, would get commercial soon, and that will add on to the commercial molecule kitty of ours. In terms of the modalities in which we are working, we have a couple of molecules which are on the ADC side, which are in late phase. Peptide molecules are mostly on the early stage side.

Okay, okay, thank you. And one last question, Asha, you already mentioned that there has been some timing related shifting in terms of customer ordering, and that will be later in the later part of the year. And given Q1 is down almost like a 25% on a YY basis, so how do you see the full year as a growth number for the CRDMO as a business segment?

See, on a... See, historically, and if you look at our long-term historical growth, we have been delivering numbers consistently, and it's a double-digit growth we have delivered. So what we are saying is, for this year also, our growth prospects remain intact. We have our order book full, so we will make up for the lost sales, whatever we have declined, you have seen in quarter So, you will see the numbers coming back as a recovery in Q2, Q3 and Q4. Our growth prospect for the full year remains intact. It will be in line with our historical growth performance and our margins also remain mostly intact. This is the nature of a business where you will see that there will be some element of upswing in some quarters and some downswing I also want

to sensitize all of you that, you know, sometimes this year, again, I'm We have a bumper quarter, and please don't make that as the benchmark because then the subsequent quarter... We may not be able to match up to it. So, there will be soft quarters, and there will be some very, very nice quarters. As Gaurav just explained, it depends on when our customers want delivery. Sometimes they all come together, but as you saw when we explained our capacities, we have the capacities to deliver. The next quarter, our capacity utilizations are definitely higher, and we just will have this lumpiness in our business. It's the nature of our business.

Keep looking at our business more on a year-on-year front.

Yeah, holistically, if you look at it, it's a year-on-year. That's how we have always looked at it. I know we are new to the markets, and markets are used to quarter-to-quarter performance, but this is a different type of business.

That's helpful. That's the last question on your unit 4. So can you provide some current status where we have reached, how much capex we have already incurred into unit 4, and what are our capex outplay for next two years for unit 4, as well as the timeline of commissioning this unit 4.

We have articulated this, roughly about 1200 crores is the capex outlay for unit 4, and this is phase 1 of unit 4. Unit 4 is a large-scale addition for us, roughly about a 30-acre property, and phase 1 will be using half of the... Half of the area available for expansion. So, in phase 1 itself, we'll be adding about 365 kilolitres of custom synthesis, 100 kilolitres of fermentation. We are also adding a food and a nutra plant over there. So, this will take about two years' time for us to build. We broke ground last year. By end of this FI 28, we will be ready with our unit 4. The 1200 crores, what we are talking about, roughly could be a 50-50 split across both this year's FI27 and FI28. Civil work is almost getting done over there in Unit 4. We will start putting in orders for equipments to come in now. So it will take time, but by the end of FI28 is when we will be ready with our Unit 4 expansion.

Thank you, thank you. That's all from my end. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit the questions to two per participant. The next question is from the line of Bino Padhi Parampil from Elara Capital. Please go ahead.

Hi, good morning. Just following up on the previous question, what will be the total capex for this year, FY27?

FY27, targeted capex for this year will be close to about 700 crores.

Okay, so, and it will remain elevated next year also because of unit 4, and then it should come down from there, which is outstanding, correct?

Sorry, come again, please, on this.

Because of unit 4 CAPEX, it will remain elevated next year, FY28 as well. After that, the CAPEX will come down from those levels. Is my understanding correct?

That's correct.

Okay. And again, following up on the growth, obviously there are quarterly fluctuations, but for the full year, do you still maintain your targeted growth rate of 20% for this year?

See, our growth is intact. We are not getting the guidance of any particular percentage, but historically, if you look at our last 10 years growth, we have delivered quite healthy growth rate, and we will continue to do that in this year as well.

Understood. And for the quarter, I see a very low tax rate. For the full year, would the tax rate normalize to around 25%?

It should normalize to about 25%. If you look at last year, our tax rate was high because we had losses in our Unit 3 subsidiary New Anthem, which, you know, we have, hopefully, New Anthem will be something to turn break-even this year and maybe profitable as well in the full year basis. So, we will have a much more marginalized tax rate of about 25-25.5% for this full year.

Got it. Thank you.

Thank you. The next question is from the line of Bansi Desai from JP Morgan. Please go ahead.

Thanks for taking my question. So, my first question is on semaglutide API. If you could share, have we started our commercial supply on this product to domestic players? And secondly, in light of the fact that, you know, one of your peers is facing scaling up issues on the API manufacturing front, you know, are we seeing more inbound queries from, you know, domestic players who are seeking alternative source?

Yeah, thanks, Vansi. Certainly, we have not started supplying. That's something that is still in the works. We are awaiting approvals from Sedisco. We've done all the work. We're ready to scale up as well. We've done enough trials and enough scale-up activities to know that our product, once we have permission, will be able to supply people. And as we've said earlier, that, you know, the... We have sampled almost all the big players, and many of them are waiting for us to have the approval from Sidisco, and then they're ready to go. So that's something that we are waiting to happen, and it will happen sometime this year, for sure. So, you know, none of this is because somebody else has not been able to scale up again. Should that opportunity arise, we are ready to service that. But GLP-1 still hasn't kicked in in terms of sales for us, but it's something which is in the works and should happen soon.

All right. That's clear. And my second question is, you know, Ajay, in the past, you know, when you guided, you know, for growth, both on top line and back, it appears that clearly we are expecting our margins to, you know, maintain at these levels. Now, these are obviously, you know, industry high margins. So, one is what gives us confidence that, you know, we'll be able to maintain these margins. And second is, you know, do we expect these margins to sustain if one has to take slightly longer term, you say, you know, in over next three to five years?

Um, you know, uh, we... What gives us the thing that we'll sustain the margins this year? As we said earlier, our order book is 60% already in the bag. We know what our costs are, we know what our margins are there, so I don't see any challenge with margins this year. Going forward, you know, it's very hard to predict the future, but at the same time, we've always been driving our business through technology, through innovation, and we have some, you know, things up our sleeve which will allow us to maintain these margins, we believe, because we use new technologies like flow, we are bringing in biocatalysis, things that normally people are not doing, which are quite revolutionary in cutting down costs. So that allows us to, A, engage with the customer at a very different level because you talk to them a language which they really, really appreciate that you're not just a pair of hands, you're actually contributing to innovation and technology development. The second part is that also, you know, we're allowing our customers to have better cost of goods, but at the same time it helps us retain our margins. So, I... So going forward in the next two or three years, let's look at the historical perspective. We've always had very good margins. However, when our new units kick in, yes, there is some depression in the back because, you know, we have made some large investments. But the margins overall, see, even in this quarter, we have increased our material margin. Even though the top line has not been so great, our material margin has increased. So we are in a position to, I believe, defend these margins.

Understood. That's clear. And just one, you know, clarificatory question here. Gavid, if you could, you know, just help us quantify what is the ESOP cost and what is it going to be, you know, for the full year for fiscal 27?

The ESOP cost is about 9 crores for the full year 27. So, quarter 1 is about 0.25 crores. This was roughly about 16 crores for the full year 26.

So, there is a decline on the ESOP Okay, and going ahead also, this should be declining, like if we have to think about fiscal 28 and beyond.

Yes, on a like-to-like basis, I think this is the third year when we have taken the ESOP charge. The fourth year ESOP charge for the ESOPs which have been granted will be closer to about 5 crores next year. So there will be a decline.

Thank you.

Thank you. The next question is from the line of Viveka Garbal from Citigroup. Please go ahead.

Yeah, thanks for the opportunity. Sir, you mentioned that one of your large biotech customers has been acquired by a big pharma. So with this, how you see any kind of change in the demand, especially for the projects that you're working with this biotech customer, any particular outlook? Would you like to share how this change, how I think this experience changed the overall outlook of this particular project? Thank you.

Right. You know, there's a constant M&A going on in our customer side. So, the latest is one of our very nice, decent-sized biotech customer has been acquired by Big Pharma. However, the impact This is not material for the rest of this year. Usually when an acquisition takes place, they leave the team alone for a year or sometimes even a couple of years to do their thing. And then only slowly there is a ramp up of volumes. So this is something that, you know, it's something we are waiting to see, which we will. We know about the acquisition, we've got an initial letter saying that we've been acquired, but we've had really no meaningful discussions with the acquirer, the big pharma. So, that is something that actually shapes up over time. So, you know, our business actually has a very long-term time span. So we have to look at it from that perspective. We have to be patient. But also, it's long term, but at the same time, it's also very sticky business, given that it's highly regulated. We, as long as we keep building, getting new products approved, we keep building a pipeline of customers, which are, every year we add a few more, I think we're in a good place. Because that will deliver the numbers four, five, six years from now.

Understood. Understood. So just one clarification. Have you worked with this big pharma in the past or the acquirer? How is your experience with it?

They know about us, we met them, but we never had any meaningful business with them till now. But, you know, that's going to change now because the company that they've acquired, we do decent business with them. So, it gives us a put-in. We've seen in the past, that's a nice way to get into a company.

Understood.

And, sir, would you like to... Mr. Garbal, may we request you to return to the question queue for a follow-up question? Thank you. The next question is from the line of Prashar Manudanev from Motilala Oswal Financial Services. Please go ahead.

Sir, just extending the previous participant's question. So, this existing customer contract, was this the manufacturing commercial contract or was this like a scale-up for product approval if you could share that point?

It's a development contract, which we are working with the emerging biotech, which has been acquired by the big pharma.

So, sometimes, this is not a commercial product, but given a late-stage acquisition, see, again, we don't have visibility on what the clinical data is, which millions of dollars have seen. So, it is near commercialization, or it is still... There's a work and very prompting data. This is a contract, it's a late phase.

Got it, sir. So basically, product pipeline, let's say revaluation, and then subsequently to get the commercial contract if this product further progresses on the clinical trial and then commercialization, these are the two key milestones to watch out for as far as business from this product is concerned.

Absolutely. You know, and not just this for us, this is the key milestone we watch for every company in the past whom we're working with biotech that get acquired. So recently another one got acquired, but that's a little early stage. So, you know, all these are, as we said in the past on this call, it just gives us many more shots on goal. And we are, you know, we are very hopeful that some of these could translate into large-scale business opportunities. Some would be medium-scale. It just also depends on how successful the big pharma is in marketing that product.

And just secondly on this, were we sort of building or already have the capacity for scale-up considering that it was in page 3 eventually was to come up for approval. So were we building enough capacity for this product and would that require dedicated one?

So, see, the phase 3 quantities which we have supplied has been supplied from our existing unit 1 and unit 2 itself. Now, in terms of capacity addition, yes, we are doing it in our unit 4. That's whatever room for expansion, whatever capacity utilization is there in our unit 1, unit 2, and unit 3. The route that we are doing in Unit 4 is largely keeping in mind that there will be growth in our existing 4-beam commercial molecules as well as the one which we have in the late phase, the 10 molecules that will be commercial. So, a unit for expansion is largely catered towards this particular price.

Got it, sir, got it. Sorry.

No, no, go ahead. It's fine. Gavir has already answered.

Got it. So, just lastly, on any working capital changes that have happened over the last, let's say, quarter or two?

Not significant, Tushar, because, see, if you look at our, I mean, our receivables should have come down, because quarter 4 was a large quarter, so there would be a sterilization of receivables. Quarter 1 was a softer quarter, so the receivables would be proportionate to the quarter 1 sales. There is a little bit of inventory buildup, which we have, because Thank you. Because of the RM supply is tied up for two years. Overall, I think it's all normal course of business. When you look at H1, you will find that it will be in line with what H1 of a 526 will come to the H1 of a 527 balance sheet.

It's not much change in the inventory levels. Thank you so much.

This is from the line of Vivek Agarwal from Citigroup. Please go ahead.

Yeah, thanks again for the question. Gavi, sir, this time around we have seen that muted trend in other expenses. So is there any kind of one-off, or you also talked about, like, discipline, focus on cost, efficiency, yield optimization, et cetera. So something is recurring going forward. So just want to understand how to look at this other expense line in FY27 and going forward.

I think it's largely in line with the expenses that we have. There's no significant one-off in the other expenses line item. I think our focus has always been in terms of how do we optimize on costs. So across the three metrics on the cost side, raw material margin, we have been consistently increasing and that largely focused on yield improvement as well as backward integration. Most of the raw materials, most of the key intermediates. Our employee cost has been amongst the lowest as the percentage of sales, the industry. Although it might look for this particular quarter about 18.8 percent, it might look higher, but that's largely on account of the mutual revenue for quarter 127. But if you look at an FY27 full year basis, we will be largely around that 12, 13 percent, sorry, 13 percent sort of number as a percentage of sales. Other expenses will also be in a similar 9% product, the percentage of sales. It is, the sales this time is lower quarter one and hence it reflects about 2%. But I think full year trajectory will be in that 9 to 10. There's no one-off as such on other expenses.

Thank you. That's from my side.

Thank you. The next question is from the line of Thawelkut from Jefferies. Please go ahead.

Hi, sir. Just a couple of questions. So, first one, can I say that quarter one is the, you know, sort of the lowest quarter for the year, and on a quarter-quarter basis, we'll see a growth from 2Q onwards? And secondly, on specialty ingredients, it has been a softer quarter as well. So when do you think that will again, you know, sort of come back into growth trajectory, and what is it sort of going to drive it this year?

Okay, yeah, thanks, Lawal. So, yeah, we clearly see the Q1 as the softest quarter for the year. We expect it from here on only to grow. The second part being that speciality ingredients. Well, speciality ingredients also, you know, there's been a lot of turmoil in raw materials because of the war and everything, because this business is more focused on, you know, in the domestic market. So we've had a lot of pressure on supply chain pressures. But at the end of the year, this specialty ingredient should also grow. We are very confident. We have visibility now that over the last year, there will be very decent growth in specialty ingredients as well.

Just a small follow-up. On the GLP side, so you said you expect CDSCO approval. So beyond that, what are the other markets that we are targeting and maybe if we have started any regulatory work on that molecule?

We've started the regulatory work, but we're not targeting any other markets at the moment. We just need to get the decks cleared for being able to produce this product. Yeah, we've sampled customers overseas. We are talking to them. But everybody is obviously waiting for, are you free to sell in your own country? And that's going to be our first gate. That should happen. You know, very soon, we expect it in a quarter or two, and that will put us on course for supplying the market. We still see GLP-1 as a long-term, very robust opportunity.

Okay. Thank you, sir.

Thank you, Dabal.

Thank you. The next question is from the line of Sain Mukherjee from Nomura Group. Please go ahead.

Yeah, thanks for taking this follow-up. Again, I just wanted to understand that, you know, the whole world is talking about artificial intelligence, you know, being part of the biotech pharma ecosystem. What kind of use cases you are seeing today? And for your business, how you perceive this business is going to be sort of structurally impacted and what kind of impact it can potentially have on the financials, let's say, if you think about like three, five years?

Yeah, very good question, Sian. This is something that's an evolving landscape. We do see and we intend to start using it in specific use cases. See, first, again, you know, it always takes time to separate the hype from reality. So, a lot of AI talk is at the moment hype. When we drill down to, okay, show us a use case, then it is... Very thin. So, but at the same time, some of the very obvious things that we're looking at are, you know, document review, when you have a lot of documents to review in quality assurance, which have to be fact-checked and line by line and item by item. That, I think, can be automated and brought in the AI. There is also a talk of that AI will use a lot of models, will be able to predict chemistry better. They will offer better or, you know, give us targets which were yet, which the humans may not be able to foresee or develop. But that's a good news for us because if they use AI in deciding targets for specific antigens, then those mean there will be more targets available. Somebody still has to make, you know, go into the lab, put chemical A and B or do fermentation to produce the product. So if more targets are being discovered or are being potential drug candidates, Anthem will, I believe, tend to benefit. We'll get more work to do this discovery part. So that part is still very, you know, yet to be seen. Then there is also further downstream. We think that, you know, we already do a lot of automation in manufacturing. We are going to start looking at use cases there where we can see better optimization of our resources, better optimization of our facilities. So all those are being looked at, and we will, over the next three, four years, certainly we are very actively seeking use cases. We don't want to be in a position where we, you know, we get left out. But at the moment, there is still a lot of talk, but the use cases, and, you know, again, remember, we are, our clients are some of the biggest pharma companies. We're even asking them, you know, where is it that you're using this? Even there, we get rather vague answers and not, you know, so far something that we can hang our hat on. It is an evolving scenario, but please be reassured that Anthem will not miss out on this opportunity as the use case develops.

Thank you. Thank you.

Thank you. The next question is from the line of Partsoda from 3 Netra Asset Managers. Please go ahead.

Yeah. Am I audible? Hello.

Yes.

So, first of all, thank you for the opportunity. And my question is, how are the four recently commercialized molecules progressing versus our expectations?

I think we did a decent amount of sales last year, March 26, for the recently commercialized molecules, and with respect to the pipeline for this year, the order book for this year, I think there will be a growth with what we have delivered on March 26 on these recently commercialized molecules. It needs penetration in the markets where the innovators have launched this molecule. And based on that, you know, our additional supplies will come in, but it will take a couple of years time for sizable supplies to come in for these molecules.

Okay, thank you so much for the opportunity.

Thank you. The next question is from the line of Udit Pukaria from Catamaran. Please go ahead.

Thanks for giving the follow-up opportunity. Sir, wanted to understand what are the usual reasons why a product which is growing year-on-year, customer goes for deferment of delivery?

Okay. See, this is a very complex thing. See, we... The customers that we cater to serve as global markets. In some markets, they also anticipate better, higher takeoff, and they stock material there. But then when that does not happen, they also, you know, depend on projection. These are growing molecules. So they will end up stocking in a big geography. I mean, just to take a thing, let's say they expect a lot of sales in China and Germany, and they project certain sales growth in France. And when sometimes that doesn't happen, they reroute that to other markets. where they had planned materials from, you know, differently. So all this rerouting that happens and they say, okay, let's first exhaust this stock that we have built up in these markets and then please supply it to us later on because we are seeing the growth there, but it is not as far as we anticipated. So this is one of the reasons why there is always a rebalancing and a deferment of supplies. You know, and also sometimes they are, remember these are growing molecules, So, they are adding market after market as approval. So, they are filed somewhere, and, you know, the approval doesn't come on the time that they expected it to. Then they have to wait for another quarter. You know, the file is in, but approvals have been deferred. So, therefore, there is some deferment of supplies. We are, we have confirmed orders, and they will adhere to taking those orders. How they want to redistribute, sometimes even in our business, they'll call up and say, okay, we are expected to take it to this geography. Don't ship it there, but ship it to another location. This happens all the time, but largely, you know, it doesn't affect the overall business, but it can affect the quarter business, as was the case this time.

Thank you.

The next question is from the line of Sajal Kapoor from Anti-Fragile Thinking. Please go ahead.

Thanks for the opportunity. Hi, Jay. As Anthem has expanded into multiple advanced modalities, What do you believe customers value most when choosing Anthem over other CRDM-ers, and if you had to rank, you know, let's say two factors, top two, what would those two factors be? I mean, it could be backward integration, but I'll let you.

Kapoor, sir. What customers value what they see in you over a long term? First is, do you keep the promises you make? Secondly, are you just offering them a pair of hands, or saying, you're asking us to do this, but we will bring this kind of innovation to it. So they do value innovation where you are no longer, you are helping them create. New IP. That's something that Anthem really prides. And third is the ability to be regulatory compliant. So your track record on regulatory compliance is also really important to our customers. So on all these three counts, if you score high, you're very likely to be favored by the customer. There are many other subtle factors which I can go on and, you know, we could be here all day, but there is also the quality of your manufacturing. There is also quality of your people because what our customers want to do is they don't want to just interact with me or senior management or a project manager. They like to interact with the scientist. They like to interact with the man on the shop floor. And if those people know what they're doing, it gives them a lot of confidence. And in our case, that happens to be the case. Our training of our people is 360 degrees. They get exposed to all aspects of the company's operations. So, therefore, the quality of manpower is another factor that Anthem is really, really different from its peers.

Love the brutal honesty, Ajay, no sugarcoating, and that's the way you have been conducting these calls. I joined many calls, and not just TDMO. This is one call where I have always enjoyed the brutal honesty. If I may ask one more question, and I'll just rejoin the queue.

Well, thank you for saying that. Stay invested, and if you haven't, please buy Anthem. We have.

So one more question, Ajay. As Anthem continues to broaden its platform, which capability benefits the most from that expansion, and conversely, which capability becomes the hardest to preserve as the organization scales, and why is that?

See, uh... The time frame from what used to be speciality to fine chemicals to genericization and then commoditization has shrunk every year, every decade. So what you may consider speciality today will become fine chemicals much faster. A fine chemical will go towards commoditization much faster than before. So, in that aspect, what is a commodity which holds you in good stead is that you are thinking ahead and saying, okay, right now I'm sitting on an asset which is, you know, performing, is considered very high speciality, but tomorrow that won't be. So what is it that we can do, A, to keep that moat or make that moat bigger? That is in terms of innovation. Second is, what are the modalities that we need to add? Because this is where the whole industry is growing. And that is where we are very fortunate to have a front row seat because we work with hundreds of biotechs at any given time. We can see that the new modalities that are emerging or the new things that they are looking at are very different. And so very quickly we bring that skill also in-house. So that is, I think, where we try to differentiate from our peers, and that's what I think will keep our nose ahead. But, you know, as we said, you have to be very cognizant of the fact that the whole scenario is evolving and changing very rapidly. The old way of doing business, the old way of doing things, it has a value, but if you don't keep moving forward and sharpening your tools to a point where you are different from all the others, you could be left behind. So that is something that we really take a lot of care.

Thank you. Wonderful. Thank you so much, Ajay. Best vision.

Thank you. Thank you.

Thank you. Ladies and gentlemen, we will take that as the last question of the day, and I would now like to hand the conference over to the management for closing comments.

So, thank you, everybody. Once again, it was very nice talking to all of you, and, you know, we will, as we have said before, Anthem, It endeavours to be totally transparent, be accurate, and continues to be well-governed. And this is something that we are very mindful of, and we will continue to do that. So even though this has been a quarter where the top line has been soft, please don't be swayed by that. That's the nature of our business. There will be quarters going forward, which could be very huge. Don't be swayed by that either. That's also the nature of our business. But as long as we are trending upward and have growth very sharply defined, which in this case is what I'm assuring you, we will grow as we have grown in the past, even this year. So please keep that in mind. Our business has to be looked at for the whole year holistically. It's the nature of the beast which we can't control. And I really thank you for your confidence in Anthem, and we will... Try our level best to, you know, honor that confidence and not give you any reason to be shaken, your confidence to be shaken in Anthem. So thank you very much.

Thank you.

Thank you.

On behalf of Anthem Biosciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.