Sai Life Sciences Limited (SAILIFE) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Sai Life Sciences Limited Q2 FY27 Earnings Conference Call. 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 the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Diwakar Pingle from EY. Thank you, and over to you, Mr. Pingle.

Diwakar Pingle:

Thank you, Siddharth. Good morning to all the participants on this call. Before we proceed on the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with the business risks that could cause future results, performance, or achievement to differ significantly from what is expressed or implied by such forward-looking statements. Please note that the main results and the presentation are available on the company's website. In case anyone here has not received the same, you can write to the investor relations team, and we will be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of Sai Life Sciences Limited, represented by Krishna Kanumuri, Managing Director and Chief Executive Officer, and Mr. Siva Chittor, Whole-Time Director and Chief Financial Officer. We will start the call with a brief overview of the quarter gone past and then conduct the Q&A session. With that said, I will now hand over the call to Krishna Kanumuri. Over to you, Krishna.

Krishna Kanumuri:

Good morning, everyone, and thank you for joining us for our Q2 FY27 Earnings Call. As we conclude another successful quarter for the company, our priorities at Sai remain unchanged: to deepen our relationships with global pharmaceutical companies, expand the range and complexity of services we offer, and build the capacity and capabilities required to support customers over the long term. We are making progress on each of these fronts. We are seeing continued interest from large pharma, increased traction from our integrated outsourcing model, and steady progress on our capacity expansion programme. Let me begin with a brief overview of the broader operating environment. Tailwinds supporting supply chain diversification continue. We remain focused on converting these opportunities into sustainable business growth. Recent developments in the U.S. and China add another dimension to this. In the U.S., the proposed rules under the COINS Act seek to introduce additional restrictions on certain U.S. investments involving Chinese biotechnology companies. Separately, China's Ministry of Commerce and Ministry of Science and Technology have proposed additional controls on the export of selected technologies, including in the biomedicine space.

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Sai Life Sciences Limited November 06, 2026 While these are evolving regulatory developments and their eventual impact remains to be seen, they reinforce the importance of geographic diversification and the need for pharmaceutical companies to build resilient alternate supply chain partnerships. We believe Sai is well-positioned to benefit from this trend, particularly given our established relationships with global innovators, our integrated capabilities, our track record of supporting customers across discovery, development, and manufacturing. The advantage increasingly lies with CRDMOs that have scientific depth, infrastructure, and customer relationships to take on larger, more strategic engagements. The ongoing situation in the Middle East is also having some impact on the cost of certain chemicals and solvents. While this has created some cost pressure, our proactive supply chain management has ensured continuity of material availability. We are working closely with customers to recover the incremental costs wherever applicable. On the business front, we continue to see good traction in outsourcing opportunities from the large pharmaceutical companies. An important milestone this quarter has been the consolidation of our position as an integrated CRDMO of choice to large pharma customers. During the last investor call, we had announced our first end-to-end integrated collaboration with a top-tier market-cap pharma company. We have since commenced operations with this customer. Building on this success this quarter, we have converted another large pharma relationship into a similar strategic engagement. We are also working on extending this model to other large pharmaceutical companies. Discussions are progressing with a few more large pharma customers, and we see encouraging potential to deepen these relationships over time. Our focus remains on building long-term partnerships where we can progressively expand the scope of work from individual projects to integrated engagements spanning discovery and development, and eventually into manufacturing. We believe that such integrated partnerships will help us build a robust, consistent, and predictable long-term pipeline and revenues. With that, I will hand this over to Siva to take you through the operating performance and the progress of our capacity expansion and capex programme. Siva Chittor:

Thank you, Krishna, and good morning, everyone. Let me take you through our operating performance for the quarter, followed by an update on our capacity expansion and capex program. For Q2 FY27, our revenues grew by 23% year-on-year, with the CDMO business growing by 20% and the CRO business growing by 28%. For the first half of fiscal '27, overall revenue growth stands at 17% year-on-year. The CRO and the CDMO businesses contributed to 38% and 62% of the half-yearly revenue, respectively.

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Sai Life Sciences Limited November 06, 2026 EBITDA for the quarter was 28% of the revenue and was in line with the year-on-year margin trajectory. For the first half, EBITDA margins stood at 28%. As we had indicated in our earlier calls, we expect the second half of FY27 to be stronger than the first half. Let me now give you some highlights on our operating performance. Let me start with the CRO discovery business. During the quarter, we successfully started integrated discovery programs with two large pharma customers, building on the efforts I outlined during our last investor call. These programmes are currently small but are a validation of our belief in this model, which has the potential of becoming a significant lever for future growth. We also witnessed an uptick in enquiries from Biotech customers, that points to a revival in the biotech sector. Many of these enquiries are for integrated engagements in new modalities, specifically peptides. In CMC, our late-phase and commercial pipeline continues to remain strong. Over the quarter, we added one molecule to our late-phase pipeline, while one molecule moved from late-phase to commercial. On the cost front, we have seen a modest increase in raw material costs, particularly certain solvents and chemicals, arising from the ongoing Middle East situation. As Krishna mentioned, our supplychain teams have been proactive in ensuring material availability and continuity of operations. We are also working with customers to recover these incremental costs. We expect the impact to be managed through these recovery mechanisms over time. Coming to our capex program, we have incurred expenditure of approximately INR621 crores during the first six months of fiscal '27, of which INR358 crores was incurred in Q2. We remain on track with our overall capex plan of INR1,100 crores-INR1,300 crores for fiscal '27. Let me touch upon the progress across some of our key projects. The expanded small molecule manufacturing capacity at Bidar, of around 220 KL, is now ready. We are currently completing the final quality trials at the site ahead of commencing commercial batches. This is an important addition to our manufacturing capacity and is expected to be revenue accretive in the current year. On the second phase of capacity expansion, we have undertaken some prioritization of projects to align with some of our customer priorities. As a result, the commissioning of the additional capacity of 225 KL is now expected to be available by early Q3 of fiscal '28, compared with our earlier timelines. Importantly, we do not expect this change in timelines to affect our ability to meet our revenue commitments in fiscal '28. We will continue to align the pace of capacity addition with customer demand and the requirements for our development commercial pipeline. We have also commenced the design work on our new manufacturing site in Telangana. The planning and design process is progressing, and we currently expect to break ground in Q4 of fiscal '27. This will be an important addition to our longer-term manufacturing infrastructure and growth plans. Overall, our capex programme is progressing well. While we have recalibrated the timeline for certain capacity addition based on our project prioritization and customer needs, our broader

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Sai Life Sciences Limited November 06, 2026 investment plans remain intact. Our approach continues to be science-led and aligned with customer demand, with a focus on building the capabilities and the capacity required to support Sai's next phase of growth. To conclude, we remain focused on balancing growth investments with execution discipline, ensuring that new capacity is commissioned with the required quality standards and that align with the opportunities in our pipeline. We remain confident of achieving our stated long-term growth and EBITDA projections. With this, we would be happy to take your questions. Moderator:

Thank you. We will now begin the question-and-answer session. The first question comes from the line of Amey Chalke from JM. Please go ahead.

Amey Chalke:

Thank you for taking my questions, and congrats to the Sai Life team on a good set of numbers. First question I have on the CRO business. CRO business is growing really strongly for last eight quarters now, totally against the trend. Is it possible to break down this growth? Like, how much it is led by the capacity increase? Any number you can give in the scientist addition which you have done over last six months, or anything which you can give color on, like in which areas this growth is coming from? Is it chemistryled, discovery, or biology, or any customer which we have added recently which is driving this growth? If you can break down this growth, it would be helpful for us to get clarity on the CRO business. Thank you.

Siva Chittor:

Our overall growth has been led by two factors which we have reiterated. One is the ability to do integrated discovery, which has kind of helped us build, mine an existing customer more for revenue. That is the first strategy. The second one is our growth in the large pharma, as we have alluded to you earlier in our other calls. We had a very minimal pharma presence a few years ago, and today, as of 2026 endwe had a CRO split for pharma at 40%, and these two important factors have led to our growth on the CRO side. We have not broken down the numbers by the CRO/CDMO business in terms of headcount, but if you look at, we have given you a number headcount at the end of March and at the end of June, and at the end of September, we are around 4,400 people. So there is people-related growth that has happened that you can probably take out from our investor presentation. The objective for us is to kind of make sure that we can get to all of the niche technologies and make sure that we can present and mine existing customers. That has been the strategy, and that is kind of helped us grow.

Amey Chalke:

You expect this growth momentum to maintain, and is there any future outlook on the scientist addition, let's say, for next one and a half year?

Krishna Kanumuri:

Amey, at this point, we really cannot give any guidance on that front. We are playing it by what we are seeing in the market. I think, the key pivoting a large pharma is progressing well. What pace that will take is hard to say. I think we also see biotech coming back in a small way. I think we continuously see our demand going forward. What it is, it all depends on cycles.

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Sai Life Sciences Limited November 06, 2026 Amey Chalke:

Sure, that's clear. And we are talking about two big customers for integrated programs. Is it possible to explain bit more in detail in what sense these programs are integrated and how big these programs could become in terms of revenue potential? Thank you so much.

Siva Chittor:

What we are saying is an integrated service offering, and we're not saying it's an integrated program offering. So what we are saying is that with these customers today, we provide them service across the entire drug discovery life cycle, starting from discovery going up till commercial manufacturing and the ability from a Sai perspective is one of the few companies that offer an end-to-end service, either at the medicinal chemistry, early process, clinical scale-up, commercial manufacturing, and that's a spread that we provide to a customer. What we are seeing is that customers who probably used one or two services with Sai earlier, today are coming out from these piecemeal service picks that they were doing to a more strategic engagement where they're saying, "We will work with you across the drug discovery life cycle." That's really what we're saying.

Krishna Kanumuri:

I think the important thing here, Amey, to look at is the fact that we are the only company which has significant scale in all three dimensions, so discovery, development, and commercial. I think given the fact that these relationships, it is easier for them to consider us as key partners given the scale we have and almost 10+ years track record we have with most of these companies.

Moderator:

The next question comes from the line of Sidharth Negandhi from CWC. Please go ahead.

Sidharth Negandhi:

Thank you for the opportunity. Congratulations to the Sai Life team on a very great performance. Few clarifications. You have mentioned 34 active NCE molecules, which is the same as the previous quarter's presentation, but you mentioned about one more commercial molecule getting added, so is there a churn up? And similarly, if one had to look at the update on one more coming to late stage, the net addition from quarter 1 to quarter 3 is from 11-14. If you could just help us understand that better. The second one was you had mentioned about a very fast ramp-up last quarter in the CRO capacity that was set up, which is already at 85%-90%. And therefore, on the planned capex, would you end up having a recalibration of adding more CRO capacity, given that some of the CDMO capacity you spoke of is now coming in Q3 next year? That is question two. Question three, your large pharma clients continue to be 19, right? And so I am assuming the new two programs are with existing pharma clients. While these are small today, what would that mean in terms of customer concentration, say, in a couple of years? Those were my three questions and wish you all a happy Diwali.

Siva Chittor:

Thank you, Sidharth. Let me take the last question first, which was on the pharma program. I want to help clarify a couple of things. One is the two integrated programs that Krishna mentioned in his speech is from the 19 out of 25. The program that I talked, which I said was small, was an integrated discovery program in the discovery space alone.

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Sai Life Sciences Limited November 06, 2026 What we mentioned, if you go back to our last investor call, we said one of our key factors for success with the biotechs was the ability to do integrated programs in discovery space, which meant doing chemistry along with DMPK and biology and we said we want to get into the pharma space with that, and we have made certain investments in terms of automation for that. We had mentioned that we would want to get into at least one or two large pharma, and there is an effort going on. So this is what we mentioned during the last investor call. That is what we are saying. That is small. The integrated outsourcing work that Krishna talked about is with existing customers. That is a customer where we offer everything to that customer, starting from the discovery until commercial manufacturing. The integrated discovery is just a portion out of that. On the second point, I think in the last investor deck, we had the number, there was a typo in the number, and it was showing as 34, but we confirmed in the call that it was 33. Then we confirmed that there was a churn in one of the molecules, which it is becoming less active, which is why we said it became 33. So the 33 became 34 in this quarter based on a product moving from the late phase to commercial. On customer concentration. I guess, this will have to play out. At this point in time, I think we announced at the end of last year, the largest customer was around 12%. I would believe over the next two, three years that some of these things in terms of relationships and strategic focus from the customer end changes from a Sai perspective, some of the top 10 customers would itself rejig and then would come back in a different order, is how we believe and feel. We remain cognizant of concentration and how we should manage it, and we are actively working to make sure that we are not focused on one. We've already onboarded two, and we are saying we will onboard more. The other point with respect to concentration within a customer is very different being concentrated on a specific product. So if I have one product and that constitutes the entire revenue with the customer, and God forbid, for whatever reason, that product did not pan out well for the customer, that has a complete impact on our numbers. But if I'm doing an integrated business, and even if I'm doing a very large number with that customer, I am probably doing five, six different services, five, seven clinical molecules, two, three commercial molecules. So, the concentration per product or per service then comes down and is smaller. So, the concentration with one customer is slightly different from concentration on that specific product. I hope I answered all your questions. Sidharth Negandhi:

Thank you so much. Just one thing. I had also checked on, you've spoken about 85% utilization on the new CRO block in the previous quarter. Does that mean that there will be certain recalibration of our capex plans to add more CRO capacity, given how that business has been growing?

Siva Chittor:

We are already adding at this point in time.

Moderator:

The next question comes from the line of Amit Yadav from KJMC Capital Market Services Limited. Please go ahead.

Amit Yadav:

Thank you for the opportunity. Great set of numbers. Congratulations to the team. My first question is on AI's impact on the discovery cycle. So basically, we can see that, how do you think the AI adoption will change the discovery to development cycle for CRDMOs? Particularly, what I am

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Sai Life Sciences Limited November 06, 2026 talking about is compound synthesize, the laboratory experiments, and etcetera. For example, could this mean shorter discovery cycles and reduce billable FTE hours for higher projects, which will give a faster progression? My second question is on capacity expansion and return- on- investment. Basically, we did a INR621 crores investment in H1 FY27. The full year capex is planned for INR1,100 crores-INR1,300 crores, if I am not wrong. And the Q2 utilization was at 67%. How much do you think the upcoming capacity is backed by customer commitments, and what will be the utilization ramp-up and the time to break even, which we can expect? My last question is on integrated partnerships. Basically, as we saw that with the first end-to-end collaboration, which is expected to actually become fully functional in Q3, and there is another large pharma relationship converted into a similar engagement, how do you think these partnerships will give a future revenue visibility, and what will the wallet share for these partnerships will be? And lastly, what do you think the growth will be for the next two years with these supported by the committed business? Siva Chittor:

Amit, there are too many questions. I probably will not be able to even remember and write down everything that you had asked me. So, Yes, can we limit it to two questions just make sure that everybody else can have a chance?

Krishna Kanumuri:

I can answer the AI question, which is a very broad question. I think AI impact on discovery services will not be significant, because end of the day, I think no matter what the design is, you have to continue to make the molecules and test the molecules. Everybody I have talked to from a pharma standpoint has told us that the outcome of this will probably be doing more molecules rather than reducing budgets, depending on success. Still, the proof is not yet out in terms of effectiveness in discovery, but nobody so far has seen a downward shift in our external sourcing budgets. That is very clear. So I do not see any impact from that, from the CDMO sector. If anything, you have more molecules in the clinic, that helps the development side. I see AI as a net positive for India, and also because given the fact that the better quality tools are available for us for process optimization, process development, that could effectively makes more competitive.

Siva Chittor:

On the question on capacity utilization that you had asked. The CDMO business from a plant capacity, we consider a plant to be fully utilized if we reach around 70%-75% capacity utilization. We look at our ROIs and look at our investments based on which we take decisions and customer, or potential based on which we take decisions on capacity expansion. And these are taken 24- 36 months in advance, because that's really how much time you will need, one, to plan, and second, to execute some of these pharmaceutical plants. You know, is everything, and we've mentioned this last time, we do not believe and we do not have a complete commitment on any plant. This business is a service business unless you put up capacity and unless you're available and be ready, customers will move up their products from a clinical phase to some other supplier in commercial. What you will get to hear is potentials and possibilities. What you expect to hear is molecules that are currently with you that have the potential to continue to remain with you, and then

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Sai Life Sciences Limited November 06, 2026 you take your own estimates and projections to make a capacity available ad that's the only way we will be able to do this. Amit Yadav:

Lastly, just a quick follow-up actually and so about the end-to-end collaboration that will be functional in Q3, and there is a similar large pharma deal which is happening right now. What do you think will be the revenue visibility and the wallet share for the same?

Krishna Kanumuri:

We don't give any guidance in that count. We've never done and never will.

Siva Chittor:

The broader scope that I will leave you with is that integrated CRDMOs like a WuXi or a Pharmaron have had a significantly longer trend of consistent growth, and they have all built their businesses working around some of these strategic relationships and you probably have more knowledge than me with respect to these companies.

Amit Yadav:

So do you think in the next two years, we can expect a growth in this portion of the segment?

Siva Chittor:

Obviously, yes. There will be growth.

Moderator:

Thank you. The next question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.

Sajal Kapoor:

Yes, thank you, and congratulations on the quarter. And Krishna, Siva, looking back at the IPO, how did you think about the pricing back then? I mean, getting the highest price the market would pay or leaving room for new shareholders to do well? Does that thinking carry into how you guys set guidance and what price any future capital raise may be at? Thank you.

Siva Chittor:

Our objective was to always make money from an investor perspective. We have done that, whether it was a private equity investor, and we were very clear when we came to the market, that was our objective. With respect to future raises, it is kind of too early to comment, but our fundamental thesis will generally remain the same.

Sajal Kapoor:

That's helpful, Siva. Second is, for Sai, the real moat is customer relationships. Over 90% of revenues come from returning customers. But then people leave on both sides, right? About a fifth of your staff turnover each year, and client champions also move on. When people move, what keeps the work at Sai, and how do you measure whether that's getting stronger? Thank you.

Krishna Kanumuri:

Just to answer, I think the relationships go at a very senior level at Sai. I don't think they're really built at the ground level. Our turnover at the senior level and mid-level is extremely low, so I don't think that's really a concern for us.

Moderator:

Thank you. The next question comes from the line of Roni Naik from Arete Group Family Office. Please go ahead.

Roni Naik:

Hi, first of all, congratulations on a good set of numbers. My first question is, what are your capex plans, not just from FY27 perspective, but for the next three to four years going forward because as in the CDMO, we have witnessed that first of all, you build capabilities, and then probably the orders comes. So, can you provide a guidance on that part?

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Sai Life Sciences Limited November 06, 2026 Siva Chittor:

On the capex front, I think we haven't provided a three-to-four-year guidance. I think when we are ready with some numbers, we will come back to investors and provide this, but I think suffice to say, just based on opportunities we see, we should see a strong capex cycle for the next couple of years. That's what we've indicated, I think, earlier in the last quarter Q&A, and I think that guidance remains.

Roni Naik:

Okay. And how are you planning to fund this capex because as we see, your cash reserves are close to INR100 crores, and internal accrual, like INR400 crores-INR500 crores you are generating internally. So, how are you planning to fund this capex?

Siva Chittor:

I think we have a fairly comfortable leverage at this time. We will use that leverage to our benefit, given that I don't have all of the numbers in front of me and I've not completed this exercise, I will not be able to provide you that complete guidance on how I will do. The only commitment we've given to the market is we will not starve the business of capex, and if we need to come back to the market or take debt, we will do both of it.

Moderator:

Thank you. The next question comes from the line of Karan Gupta from ACMIIL. Please go ahead.

Karan Gupta:

Hi. On the CDMO front, I just wanted to know how many molecules that we have in the Stage 3. As you said, there are 155 programs in the pipeline, but how many in the Stage 3?

Siva Chittor:

So we have given this data in the investor deck with respect to the late phase. We have stated that we have 14 programs in late phase, and then we have 34 programs that are commercial.

Moderator:

The next question comes from the line of Sidharth Negandhi from CWC. Please go ahead.

Sidharth Negandhi:

Hi, thank you for the follow-on opportunity. Just to understand, we added one molecule last quarter and one other this quarter to the list of commercial molecules, but in molecules that we've taken from discovery to market, that continues to remain at five. So, I'm assuming these were lateral entries. Just wanted to understand whether we are the second supplier or the primary supplier in both cases. And if so, if you could give us some understanding of what that means in terms of wallet share?

Siva Chittor:

We do not discuss molecule-level details, Sidharth. All that I can tell you is that our business is today not based on taking a molecule from discovery to commercial, which is a span of 12-14 years. Our business is to kind of see if we can integrate within the CRO side, integrate within the CDMO side, and follow the molecule and there will always be tactical opportunities where you can come as a second supplier if you have relationships with existing customers.

Sidharth Negandhi:

Very useful. Thank you. And one more question on, which I missed last time, was similarly, the phase III and pre-registration has moved from 11 to 14, but you spoke of one addition to the late stage, so if you could clarify that.

Siva Chittor:

14 was also in June, and one moved out, and then one came in, so the number remained.

Sidharth Negandhi:

Okay, sorry. Because the number in the Q1 presentation seems to be at 11, maybe.

Siva Chittor:

The number that you see in the presentation was as of March 31st, 2026. We had mentioned in the call that we added three molecules, and that's why we said 14 and since it was getting asked on a quarterly basis, we decided to update the investor presentation to have that number.

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Sai Life Sciences Limited November 06, 2026 Moderator:

The participant got disconnected. The next question comes from the line of Rahul Jeewani from IIFL Capital. Please go ahead.

Rahul Jeewani:

Thanks, sir, for taking my question. Can you talk about some of the new modalities in terms of the progress which you would have seen during the quarter? So, we were supposed to commission the peptide development lab, and then we were supposed to begin construction on a new peptide facility as well. So, some color in terms of how the progress has been across the new modalities.

Siva Chittor:

So Rahul, on the first peptide development lab has been commissioned. That is, as what we discussed in the last call, has been commissioned. The additional peptide development labs that we are talking is in the process of construction, and that we believe will come in the next few months. We had, in the last call, mentioned about constructing a new plant, peptide plant in Telangana. What we've mentioned in the speech that earlier we had provided as a prelude to the question was that the design work is happening in terms of the overall site and the block as we speak. We expect to break ground in January, February. We've given a Q4 timeline to actually break ground once the master plan is done.

Rahul Jeewani:

Sure, sir. And with respect to ADCs and bioconjugation as well, we were pursuing projects within those segments as well?

Siva Chittor:

Yes. All of them are fairly active. Both the peptide and the ADC sites are fairly active on the discovery side. We're also building a development lab, so the Class 6 containment labs for crossdevelopment will come on board very soon. The discovery ones are already up. The CMC ones are almost coming online this year and then we are figuring out the next step with respect to taking larger steps on ADC side.

Rahul Jeewani:

Sure, sir. Regarding this 225 KL capacity, which was supposed to get commissioned by the end of this year, which has slightly moved into next year, what has led to the delay in commissioning of this incremental capacity?

Siva Chittor:

There was some other capacity or capability that was needed for a couple of the large pharma, so we prioritized that over this, because we were going to build this in any way in March, and then we looked at our pipeline. We still had capacity given that the 225 KL, it came very recently. We have moved it by a couple of months so that some of the other capability could come faster.

Rahul Jeewani:

Sure, sir. So now this will get commissioned in first quarter of FY28?

Siva Chittor:

We said it will come in the third quarter of FY28. We were saying that it is going to be end of Q4, which is Q1 of FY28. Now Q1 is moving to Q3.

Rahul Jeewani:

Sure, sir. And sir, last question from my end, with your permission. So you have guided to the fact that second half would be stronger as compared to first half. Now, if we see typically, our revenue split between first half, second half has been 40%-60% generally. So, do you expect a similar trend to play out this year as well?

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Sai Life Sciences Limited November 06, 2026 Siva Chittor:

Without getting into the number, I would say that the visibility is good, and we expect to have a stronger quarter. Anything more, I am going to actually guide you to a number in H2, which I would like to avoid, Rahul.

Rahul Jeewani:

Sure, sir. Thank you. Thank you for answering my questions.

Siva Chittor:

Thank you.

Moderator:

The next question comes from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.

Sajal Kapoor:

Krishna, just a quick clarification on that relationship thing you mentioned, because something very similar happened with another company in India when previous management was there. The relationship was too concentrated in one individual at the customer side, and when that individual moved, and the relationship moved with that person. So is it much more broad-based? It may still be at the senior level, but is it two, three people on the customer side know what Sai is up to?

Krishna Kanumuri:

Let me say, I can assure you one thing. In today's day and age, given the fact of the depth and breadth of relationship you have, no pharma company is going to pick up and leave for a single individual, no matter who it is. Unfortunately, I would love to say I am the person, but no, it's just, unfortunately, companies are betting on the entire team and the talent and everything together. I don't think anybody today, as a large pharmaceutical company, they bet on a company. They never bet on an individual. That's the default mode.

Sajal Kapoor:

That's helpful, Krishna. That's all I wanted to clarify. Thank you.

Moderator:

Thank you. The next question comes from the line of Dhawal Khut from Jefferies. Please go ahead.

Dhawal Khut:

Hi, thanks for taking my question. Krishna, you mentioned about two strategic relationship, with one of them being sort of getting functional in third quarter. So do you have any approximate timeline when you think the other relationship will also start to become functional?

Krishna Kanumuri:

Hard to say.

Dhawal Khut:

Okay.

Dhawal Khut:

And where is the revenue sort of to begin with? Is it going to be largely to start with in the development side, or you think it can be in any of the vertical, which the customer wants to sort of start with, based on how it has panned out?

Krishna Kanumuri:

A couple of comments, right? Number one is, these contract negotiations always move slow. Nothing moves fast. For us to go come and predict where it is, so they never give you timelines on anything maturing. Again, look, it may or may not mature as well. There is a conversation. They might not mature. In general relations, as you mentioned, we see relations going from either we start as a manufacturing partner, becoming a development partner and a discovery partner, or going from discovery to

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Sai Life Sciences Limited November 06, 2026 development and commercial. But then, as you prove more and more services, the line item is depending on that specific need. Sometimes they might have more development, sometimes more manufacturing, so it is not linear. It all depends on establishing yourself as a company who is relevant across areas. But the pace of growth in each area will not be similar. It's just that you're more entrenched in the company than you have been, more than anything else. It's just that the handoffs become much easier between discovery and development, and development and commercial and commercial and manufacturing. But the rate of growth of which is very hard to predict. Even relative growth of how big this can be also depends on how we perform, right? So there's no guarantees of anything. It's just that we're just validating the direction of travel which we've headed to. This is our aspirational state and we're seeing early signs of those sticking at this point in time. Dhawal Khut:

Right. And initial comments mentioned that you are in talks with few other customers. So just what's your sense in terms of the number of companies that are willing to build such a relationship with Indian CDMO companies? Just based on your assessment, because what happens is when the projects are coming in, when numbers are coming in, people believe in this geopolitical diversification. When it doesn't, probably there's a lot of skepticism on it. But this strategic partnership definitely shows some kind of intention by the pharma companies to sort of come to India and make strategic partners. So what do you think is the universe out there? Is it three to four select companies? You think there are five, seven companies who are sort of trying to evaluate such kind of partnership, irrespective of how many we end up converting it? But what do you think is the universe out there.

Krishna Kanumuri:

Let me take a dial back. I don't think anybody is saying right now we want to be fully integrated with one company or so forth. That's not what they're saying. Almost every company at some level is now saying we need a China independent or a broader supply chain. That's a clear conversation. And what we're seeing is, I would say almost every company in the world is looking at some level of engagement strategically in India, right? The strategy could be integrated, strategy could be manufacturing, strategy could be discovery, but they're going beyond. So we always consistently said in the past, India was a more of a tactical supplier where they would come for some projects. But now almost every large pharma is thinking about how do you become strategic with a few, maybe one or two companies in India. I'm not even saying one or two companies in India, right. And strategic does not just mean that integrate end-to-end, right. So that's our business model. Some could be just a strategic manufacturing partner, some could be strategic discovery partner. So I think, I just don't want to say there's one model here. The universe is broad. I think they're almost everybody is looking, and there's so many good companies in India who all have strategic relationships, but the flavor is different, and our flavor is different.

Dhawal Khut:

Very helpful.

Moderator:

Thank you. The next question comes from the line of Alankar Garude from Kotak Institutional Equities. Please go ahead.

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Sai Life Sciences Limited November 06, 2026 Alankar Garude:

Hi, thank you for the opportunity and congrats on a good performance. First question, Krishna, out of the various factors that are helping drive overall growth for the company, be it CRO or CDMO, and you spoke about different factors, supply chain diversification, there is also the biotech funding, integrated offerings, scale, newer modalities. Out of these four, five factors, what would be your broad picking order in order of importance which is driving that growth?

Krishna Kanumuri:

I think, Alankar, how this operates generally, right? You will generally start with companies with what is the core modality. You might just start with small molecules, but as they get comfortable, you will be entering on the edges of the business, right? You will be starting maybe, let's say back to the ADCs, right? Usually conversations will be based on linkers and payloads. Then you start doing the bioconjugation. Because the discovery side, obviously, we do everything, bioconjugation, peptides, all XDCs. So the development side, you will be slowly starting getting into more high-potency areas, and peptides, you will be starting going into development, maybe fragments. So I think what you will see, you will see a gradual migration to newer modalities. You won't see a sudden switch of saying, "Okay, we're going to jump immediately into new modalities." So I think, you will slowly start seeing this over the next two, three years. As customers get comfortable with the delivery and relations with companies, you will see more and more new modalities come into play. So I think you will see the modalities grow the next two, three years, but it's not going to be a sudden shift overnight to newer modalities. It will be a gradual shift, but the net reality is, I think, India will be a player in most of the modalities because they have small molecule backbones, and companies are actively working with partners who are willing to grow with them and invest along with their needs.

Alankar Garude:

Okay. And specifically, Krishna, I was trying to understand, given that we still have 50% of the revenues coming in from the biotech within CRO. How important has been biotech funding in driving growth in discovery over the last 10, 15 months or so?

Siva Chittor:

For the last 10, 15 months, I think the growth in pharma has been a big factor in terms of driving our overall growth. But I think if I have to take a longer-term view, we need both the biotechs and the pharma to kind of tango. That's when the overall business growth will be better. Because you still have a significant and a meaningful share of revenue from biotechs on the CRO side.

Krishna Kanumuri:

The biotech funding will come back, right? It is just right now there is a cycle of kind of selling latestage assets. So once that is done, the new company formation is going to start. I think biotech will continue to be a healthy pipeline for growth, so it is just that it is in the middle of a mid-phase cycle.

Siva Chittor:

Also, I think the number of IPOs, all of these kind of gave VCs the confidence or the early investors the confidence that there is an exit, right? The number of acquisitions that have happened this year, the number of IPOs. All of this gives them confidence. That is really what we are hearing from the market. As I told you, we are seeing some early green shoots in that area.

Alankar Garude:

Got it. Just one final question. While you are yet to freeze the exact plans at the new greenfield facility, broadly, what is the range of capacity that this site can support?

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Sai Life Sciences Limited November 06, 2026 Siva Chittor:

The land parcel is bigger than our current site in Bidar, so it can be up even a capacity higher than what we have here, but we will have multimodalities there. So it is very difficult to put one number. As we kind of get there, we will give you a little more background on this one.

Moderator:

The next question comes from the line of Gourav Bhama from JM Financial. Please go ahead.

Gourav Bhama:

Thank you, sir, for the opportunity. Congratulations on the great set of numbers. I just had a bookkeeping question. I think you mentioned before too, but nonetheless, I will confirm again. The 225 KL capacity that is commissioning is now expected by early Q3 FY28 or Q1 FY28?

Siva Chittor:

Q3 FY28.

Gourav Bhama:

Understood. And did we commission any other additional capacity this particular quarter?

Siva Chittor:

We have said that, if you look at our last presentation, we said we are adding two production blocks of 225 KL each. One is ready, which is what I stated in my presentation. The second 225 KL is what will move from the Q4 of FY27 to Q3 of FY28.

Gourav Bhama:

Understood. Thank you, sir. That is all from my end.

Moderator:

Thank you. The next question comes from the line of Roni Naik from Arete Group Family Office . Please go ahead.

Roni Naik:

Hi, sir. Thank you for again giving me a chance to ask the question. My one question is, like can you just provide a glimpse on how this new modality, oligonucleotide peptides, and peptides beyond GLP-1 will be the meaningful driver for growth going forward, and how many projects do we have on this or just a ballpark range of that?

Siva Chittor:

I think two points. One, we don't have manufacturing capacities at this point in time. Most of it is in discovery scale or early process development scale at this time. In any case, we don't talk about individual number of projects, Roni.

Roni Naik:

Okay. But sir, how will the innovator work with the one who is just in a CRO space and not in the manufacturing space in this?

Siva Chittor:

This is why we are adding our manufacturing capacity. At this point in time, today, we don't have a manufacturing capacity. But an innovator can still need R&D work before he gets to manufacturing.

Krishna Kanumuri:

Basically, what is going on in all this space you mentioned, the technology, manufacturing technology is changing dramatically. So the plants of the future won't be the plants you have today. What you're seeing is using GLP-1 capacity based on technology which is not sustainable long run. So the manufacturing tech side in both peptides, oligonucleotides, everything is changing. So we are ensuring that we have the technology part ready and we are evolving with the direction of our technology, where plants will be current with the latest technology going forward to support most of the macrocyclic peptides and other solution-based peptides. So I think, one is the current opportunity, one is the long-term sustainable opportunity. We are focused on the sustainable opportunity.

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Sai Life Sciences Limited November 06, 2026 Roni Naik:

Okay. Thank you so much. And best of luck for your next quarter.

Moderator:

Thank you. The next question comes from the line of Nishant Goyal, who is an individual investor. Please go ahead.

Nishant Goyal:

So first, I am quite happy with the quality of execution and revenue growth. However, looking at it, what are the key bottlenecks preventing Sai Life to grow at even a higher pace? is it a capacity, talent, customer acquisition? So more importantly, what are the concrete steps being taken to remove these constraints and unlock next phase of growth?

Siva Chittor:

I will not call it a constraint. I think pharma relationships in a service business take a long time, and there are no shortcuts to doing that. Our belief is that we need to follow a path that kind of builds a business long term as opposed to a short-term big bang approach. That is really what we have done so far. Do we have challenges in business? Talent is a challenge, everything is a challenge, but there are enough things that we are doing across to make sure that these things are negotiated as we kind of run business on a daily basis, but I think primarily service businesses take time, and pharma takes its own time to kind of increase and grow business.

Krishna Kanumuri:

I will also say one thing. The most important thing in any relationship in CDMO is to maintain the quality of service. I think you should not be rushing just to add revenue. You have to be ensuring that the customer satisfaction remains high throughout. I think that is the primary goal of any CDMO. So we always have a balance of growth with respect to how we will deliver effectively and maintain the relationship.

Nishant Goyal:

Perfect. Thank you.

Moderator:

Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question-and-answer session. I now hand the conference over to management for closing comments.

Siva Chittor:

Thanks, everyone, for taking time to attend the call. I think, just to conclude, we remain confident of where we are as a company, and we believe that our longer-term goals and stated positions continue to remain valid. We remain focused on balancing our investments with execution, and we will ensure that capacities are commissioned with the required quality standards. With this, we conclude the call for today. Thank you.

Moderator:

Thank you. On behalf of Sai Life Sciences, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

(This transcript has been edited, without altering the content, to ensure clarity and improve readability.)

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