ANTHEM

Anthem Biosciences demonstrated strong profitability in 9M FY26, with an EBITDA of ₹671 crore and an EBITDA margin of 41.5%. This represents a 23% growth in EBITDA year-on-year. Management highlighted that this margin improvement is structural, primarily due to the company's decision to discontinue sourcing intermediates from China and instead manufacture them in-house. This backward integration has led to improved material margins and, combined with operating leverage from controlled other expenses, is expected to sustain the current margin profile.

Consolidated revenue from operations for 9M FY26 stood at ₹1,513 crore, reflecting an 11-12% growth. Q3 FY26 revenue was ₹423 crore, which was lower than the previous year's Q3 due to a higher base. The company attributed this moderation to a global phenomenon of destocking by customers, market uncertainty^🌐, and funding challenges. Despite this, management expressed confidence in delivering a strong finish to FY26, with Q4 historically being the strongest, and projects full-year revenue growth in the mid-teens (15-16%). They are very positive about FY27 and FY28, anticipating a market correction.

Anthem is proactively expanding its manufacturing capacity to support future growth. Unit-1 operates at approximately 75% occupancy, while Unit-2, with 376 kiloliters of custom synthesis capacity, is also around 75% utilized on its 300 kiloliters, with an additional 76 kiloliter block (CP7) yet to be utilized. The Neo Anthem (Unit-3) facility is currently underutilized but offers significant scope for expansion. A substantial CAPEX of ₹1,000 crore is planned for Phase 1 of Unit-4, with civil work ongoing and major expenditures expected by March FY27. Additionally, a new 16 kiloliter peptide facility is being developed with an estimated CAPEX of ₹200 crore.

The company maintains a robust pipeline, including 130-140 early-phase molecules, with 5-6 in Phase 2 expected to progress to Phase 3 within 18-30 months. Currently, 6 molecules are in Phase 3, with 4 already commercialized. Anthem has successfully added more than one large pharma customer this year and secured 4 new product approvals. Management anticipates that these newly approved products, while requiring some time for full ramp-up, will become significant revenue drivers in 3-4 years, especially as they gain traction in the market.

Peptides, including GLP-1, and biosimilars are identified as key growth areas. Anthem is fully backward integrated in GLP-1 manufacturing, from fermentation to synthesis, positioning it competitively against aggressive Chinese players. The company has 8-9 innovator peptide programs under development and a 16 kiloliter commercial-scale facility. In biosimilars, Anthem is developing a microbial biosimilar for a US customer, with two 200-liter fermentation trains, aiming to shift the customer's production to India for cost and technology advantages. Other advanced biosimilar projects are also in the pipeline, with one expected to market in the next two years.

Management noted an improving biotech funding environment, evidenced by an increase in Requests for Quotations (RFQs). The easing of geopolitical tensions, particularly in trade relations with the US and the EU-India trade deal, is expected to create a more stable and conducive business environment. The Indian government's increasing focus on biotech as a strategic sector, coupled with incentives and PLI schemes, is viewed as a positive tailwind for Anthem's continued growth and investment in technology.