MR ANNASWAMY VAIDHEESH
EXECUTIVE CHAIRMAN
DEAR
SHAREHOLDERS,
This is my first address as the Chairman of this distinguished
organisation, and it is a pleasure to connect with you through this statement.
The year was momentous for the commendable progress we have made in
streamlining the business and crafting the contours of our operating template, which
promises sustained growth.
The past
Reflecting on the past year, 2023 was challenging for the
pharmaceutical industry. The sector faced numerous headwinds, including late-stage asset
failures, normalisation of COVID-19 product revenues, and inflationary pressures. Despite
these challenges, Big Pharma continued to invest in technology and innovation, especially
in the ADC and Obesity Drug sectors. This year, we also saw a trend reversal, with Big
Pharma now contributing a larger share of drugs to the overall pipeline.
The overall clinical pipeline has reached 22,825 projects1.
This robust pipeline is a testament to the industry's innovation momentum.
We anticipate increased Requests for Quotations (RFQs),given the
increasing trend of RFQs received in the last few months. Our advanced
R&D,manufacturing capabilities and excellent delivery track records position us well
to capitalise on this trend. Our client interactions and the considerable increase in the
RFQ inflows corroborate this conviction.
1Source: Citeline
The future
Interestingly, CDMOs are shifting their business model in response to a
changing environment. Earlier, they were predominantly focused on serving as external
service providers for manufacturing mature pharmaceuticals. However, they have
increasingly become innovation leaders and are covering more areas of the pharmaceutical
business, not only manufacturing but also adding additional revenue streams. Through
M&A strategies, CDMOs have rapidly expanded their capabilities and can deliver
technically advanced services at scale. The global pharmaceutical CDMO market size
accounted for USD 146.29 billion in 2023 and will reach about USD 295.95 billion by 2033
at a CAGR of 7.3% from 2024 to 2033, according to a new report by Nova One Advisor.
The agrochemical sector has experienced headwinds owing to the
de-stocking and price adjustments. Cognizant that inflation and interest rates are
expected to cool down in 2024 and the underlying fundamentals of the agriculture sector
remain firm, we should see a trend reversal from 2025. This augurs well for our business
as we plan to create a special business unit for this vertical for sharpened focus.
There can be no denying that the world is continuing to be hit by
multiple shocks, be it the climate emergency, geopolitical disequilibrium, human
conflicts, supply chain and energy volatility. Under these trying circumstances, India has
prudently balanced its position to remain rooted in its journey of progress.
The turmoil across the world is expected to widen the opportunity
window for the Indian CDMO spaces as global players seek to de-risk their supply chains.
Europe: There are significant concerns around the cost of
manufacturing drugs on account of price rises in utilities, logistics, and raw materials.
It is increasingly difficult for manufacturers to operate in an
environment combining rampant cost inflation with policies that continuously lower drug
prices.
Margin pressures in the West are driving enterprises to shift their
sourcing base towards Asia.
China+1: Global Innovator companies are increasingly looking to
outsource late-stage molecules to India. Policy restrictions on outsourcing to China
fuelled by geopolitical fragilities and Environmental/Health/Sustainability (EHS) concerns
have further heightened their apprehension of completely relying on China for their
requirements. Moreover, the USA's Biosecure Act proposes upon regulation (scheduled 2032)
prohibits US businesses from collaborating with Chinese biotechnology companies. It bars
agencies from contracting with any entity that uses such equipment or services. The
potential exclusion of Chinese biotechnology firms from the U.S. market creates
opportunities for Indian CDMOs to fill the gap and expand their business.
Conversely, India is a viable low-cost alternative to companies looking
to de-risk supply chains away from China.
The country is growing in tech capabilities and talent in chemistry.
There is an increasing focus on robust manufacturing capacity in terms of quality, further
supported by encouraging Government policies.
At Suven, we are firmly placed to capitalise on improving the
landscape. We have firmed our business strategies and are working to fill in the gaps to
help us align better with the sectoral dynamism. We have recognised some opportunities for
technology platforms and are constantly scouting for meaningful technology platforms (like
Sapala Organics) which will enable Suven's growth journey.
Our resolute intent is to ensure Suven's accelerated profitable growth.
And we will leave no stone unturned to reach our goal.
I wish to express my most sincere gratitude towards our employees, who
are our most precious assets, in addition to our customers, for their undeterred trust,
and all our stakeholders for their continued support and faith. This synergy navigates
us ahead, motivates us to exceed stakeholder expectations, and remain value driven.