Cohance Lifesciences Limited — Q3 FY25 earnings call

Call held 12 Feb 2025

Management summary

Suven Pharmaceuticals reported a strong recovery in Q3 FY25, characterized by a 40% surge in pro forma combined revenue and a doubling of its Pharma CDMO business. The company is aggressively pivoting towards high-growth niche technologies like ADCs and Oligonucleotides through the acquisitions of NJ Bio and Sapala Organics. While 9M FY25 growth remains modest at 5% due to earlier headwinds in specialty chemicals, management is confident in an accelerated growth trajectory for FY26 and beyond.

Highlights

  • Pro forma combined revenue grew 40% YoY in Q3 FY25, driven by robust demand across business units.

  • Pharma CDMO segment delivered exceptional growth of 101% YoY on a pro forma combined basis for the quarter.

  • Adjusted EBITDA margin stood at 38.7% for Q3 FY25 and 34.8% for the nine-month period.

  • Phase-3 pipeline expanded to 15 projects with 9 active molecules, up from 12 projects and 7 molecules in the previous quarter.

  • Inbound RFQs increased 2x YoY in the first nine months, reflecting strong innovator confidence.

  • Completed the acquisition of NJ Bio on December 21, 2024, strengthening the ADC (Antibody Drug Conjugate) platform.

  • Management reaffirmed the vision to become a $1 billion revenue company by FY30 with a focus on niche technologies.

Key financials

2 periods

Headline

  • Revenue (Pro forma Combined)
    —
    YoY +40%
  • Adjusted EBITDA Margin
    38.7%

9M

  • Revenue Growth (Pro forma)
    5%
    YoY +5%
  • Adjusted EBITDA Margin
    34.8%
  • CAPEX Investment
    ₹230 Cr
  • Cash Generation
    ₹320 Cr

What they filed

Q1 FY27: revenue down 25.6%, net profit down 97.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue594 653 769 484 498 −16%482 −26%568 −26%360 −26%
EBITDA204 233 223 104 131 −36%103 −56%117 −48%26 −75%
Net profit139 154 123 53 94 −32%47 −69%35 −72%1 −97%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentQ3 Revenue Growth9M Revenue Growth
Pharma CDMO101%11%
API Plus29%17%
Specialty Chemicals CDMO——

Guidance & targets

Revenue

  • Total Revenue Revenue · by FY30 · High confidence $1 billion
    Our vision, I shared recently, is to become a US $1 billion revenue company with a significantly higher share of CDMO and a higher mix of niche technologies.

    — Vivek Sharma, Executive Chairman

  • Pro forma Combined Revenue Growth Revenue · FY25 · High confidence Positive YoY Growth
    We reaffirm our FY'25 guidance with year-on-year growth on a pro forma combined basis for the full year.

    — Dr. Prasada Raju, Managing Director

  • Revenue Growth Trajectory Revenue · FY26 · Medium confidence Accelerated
    and with an accelerated growth trajectory in FY'26.

    — Dr. Prasada Raju, Managing Director

Capex

  • US Facility Expansion Capex · Next 1-2 years · Medium confidence Commercial facility in New Jersey
    we are keen to kind of create a commercial facility in New Jersey to accelerate the growth and to create the synergy aspect.

    — Himanshu Agarwal, CFO

Risks & concerns

  • Lumpy nature of CDMO business

    medium

    Management repeatedly cautioned that quarter-on-quarter assessments can be counterproductive due to the cyclical nature of the industry.

    Management acknowledged

  • Specialty Chemicals recovery timing

    medium

    While the business has 'bottomed out,' full recovery and accelerated growth are only expected in FY26.

    Both acknowledged

  • Working capital increase

    low

    Suven standalone working capital days increased from 108 to 138 days, attributed to higher sales and new debtors.

    Analyst acknowledged

Areas of evasion (1)

  • Specific accounting treatment of forward liability impact on future balance sheets was deferred to an offline discussion.

Q&A highlights

1 direct
Revenue from Phase-3 molecules that cleared clinical trials Partial
At this stage we haven't seen any acceleration in the growth from those two commercial molecules... we expect the demand to come back shortly.

Investors are looking for immediate monetization of the late-stage pipeline; management suggests a lag between trial clearance and commercial volume ramp-up.

Asked by Darshit Shah

NJ Bio Acquisition Accounting and Forward Liability Partial
The forward liability is on account of the liability to acquire the balance equity of both Sapala and NJ Bio... there's around Rs. 550 crore of goodwill which is sitting there.

Clarifies the ₹651 crore liability on the balance sheet as a future obligation to buy out remaining stakes in recent acquisitions.

Asked by Gagan Thareja

Shift in ADC technology landscape towards Camptothecin payloads Direct
40% of the current pipeline is with camptothecin based payloads, where we have a substantial advantage of abilities to manufacture the key fragment of both S-Trione and SN-38.

Confirms Suven's strategic alignment with the fastest-growing segment of the ADC market, positioning them as a 'gold standard' supplier.

Asked by Nishant Vass

2 min read 5 chapters

Detailed narrative

Strategic Pivot to Niche Technologies

Suven is aggressively transforming into a technology-led CDMO with a global footprint. The acquisitions of Sapala Organics and NJ Bio have established end-to-end capabilities in high-growth segments like Oligonucleotides and Antibody Drug Conjugates (ADCs). Management highlighted that 40% of the current ADC pipeline uses Camptothecin-based payloads, a segment where Suven holds a competitive advantage in manufacturing key fragments like S-Trione and SN-38.

Pharma CDMO Pipeline Momentum

The Pharma CDMO segment was the standout performer in Q3, growing 101% YoY on a pro forma basis. The Phase-3 pipeline has expanded significantly to 15 projects with 9 active molecules, compared to 12 projects and 7 molecules just one quarter ago. This expansion is driven by a strategic focus on 'laterals'—onboarding molecules at later clinical stages—which is expected to fuel commercial growth in FY26 and beyond.

Specialty Chemicals and API Recovery

Management indicated that the challenges in the specialty chemicals CDMO business have bottomed out, with early signs of demand stabilization. While this segment faced headwinds earlier in the year, it is being positioned as a dedicated strategic business unit for accelerated growth in FY26. Meanwhile, the API Plus business continues to show resilience, with 29% YoY revenue growth in Q3, supported by a curated portfolio and cost leadership.

Merger and Integration Progress

The merger with Cohance Life Sciences is in its final stages, having received 99.99% shareholder approval. The final NCLT meeting is scheduled for February 18, 2025, with the merger expected to be effective within the next 2 to 4 months. Integration efforts are currently focused on front-end synergies and scaling up cGMP facilities to support the newly acquired technology platforms.

Long-term Financial Aspirations

Suven has set an ambitious target to reach $1 billion in revenue by FY30. This growth is expected to be driven by a diversified strategy across pharma CDMO, specialty chemicals, and APIs, supplemented by a programmatic M&A approach. The company is also investing in onshore capabilities, including a planned commercial facility in New Jersey, to capture a larger share of the US market for specialized drug development.

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