Discovery Services experienced a challenging environment due to the funding slowdown in the US emerging biopharma segment. This triggered a greater degree of price sensitivity from clients and price aggression from competitors impacting both revenue and margins. This effect was partially offset by our differentiating experience covering a range of advanced modalities and the breadth of services that we offer. Despite the challenging dynamics, the division closed the financial year with successful delivery of client projects, augmented research capabilities and expanded infrastructure to accommodate the next phase of growth.
The division expanded its operations in Hyderabad with integrated chemistry and biology services enabling end-to-end service delivery – from discovery to preclinical – offered from the same location. The new automated compound management facility was commissioned to facilitate storage, profiling, and distribution of compounds, thereby improving efficiency and reducing time delays in projects. Syngene also acquired new capabilities such as oligonucleotide synthesis and enhanced its platforms such as SynTACs™ (targeted degradation), SARchitect™ (data analysis and virtual collaboration) and Syn.AI™ (AI-enhanced therapeutic R&D).
SynVent™, Syngene’s proprietary integrated drug discovery solution, continued to progress with a strong technical team working closely with functional teams.
Discovery Services has long been the mainstay of Syngene and as we celebrate 30 years, it continues to provide a strong foundation for the business and offer potential for sustained further growth. The drug discovery industry faced temporary headwinds this year, but the fundamentals remain strong with positive long-term growth indicators for outsourcing of research innovation.
The Discovery Services division is positioned to service the market with the emphasis on digitization, automation to drive efficiency in the core functional areas of chemistry, biology and DMPK. Operations are designed to respond to market value drivers through clear market segmentation, thus strengthening our client value proposition. Operational excellence goes hand-in-hand with workflow design to gain competitive advantage in each client segment.
The Company will maintain its investment commitment in differentiated, industry-leading drug discovery capabilities and platforms, leveraging the power of artificial intelligence and machine learning to reduce discovery timelines and costs.
Under the guidance of joint leadership teams, the dedicated centers delivered stable performance throughout the year and continued to play an important role in our clients’ research and development strategies. Beyond the dedicated facilities, we have jointly identified additional opportunities to service our client requirements and cross-sell other discovery research services.
Recognizing the value of these partnerships and the potential opportunities ahead, we will leverage our customer-centric mindset to build the partnership. We will continue to invest in robust leadership, exceptional talent and cutting-edge technology to deliver exceptional science and facilitate the ongoing growth and expansion of these relationships.
The Company’s integrated approach to CMC development operations (encompassing API development, formulation development and analytical services), clinical supplies and commercial manufacturing aligns our operations with the way our clients think about and outsource their commercial manufacturing requirements. Our small molecule manufacturing facility underwent a successful US FDA inspection this year. This achievement, along with our integrated clinical and manufacturing capabilities with a strong process development function for scale up activities, has positioned us to explore a wide spectrum of API clinical and commercial manufacturing projects.
The small molecule Contract Development and Manufacturing Organization (CDMO) has witnessed traction throughout the year and expanded its facilities and capabilities. For drug substance manufacturing, the Company has commissioned an nGMP facility as part of the integrated CMC strategy. It has also launched a small molecule clinical animal health facility thus expanding its scope. The Company has also added a drug product capability with the newly launched injectable fill-finish facility. This provides greater flexibility, speed and end-to-end capabilities for clients to advancing the molecules in their pipeline.
The focus for the year ahead will be on driving operational effectiveness. The intention is to develop long term, enduring strategic partnerships with clients, particularly the large pharma segment. While delivering existing client projects, we expect to see an increase in the number of pilot projects in preparation for longer term contracts. In the medium term, the plant will manufacture key starting materials (KSMs) and regulatory starting materials (RSMs) which serve as foundational elements for APIs, primarily comprising simple chemical substances. Historically, China has been a dominant source for KSM and RSMs, however, with the emerging “China +1” dual sourcing strategy with customers, we intend to offer a second source, given our capability to produce these materials cost-effectively using our existing infrastructure.
Large molecule development and manufacturing services delivered strong growth during the year. The 10-year contract with Zoetis reached full capacity with delivery in line with the execution plan. As a result of this contract, almost all the existing mAbs manufacturing capacity was utilized.
In December 2023, Syngene successfully completed the acquisition of a biologics manufacturing facility from Stelis Biopharma Ltd which, once operational, will add 20,000 liters of installed biologics drug substance manufacturing capacity. The acquired facility also includes a commercial scale, high speed, fill-finish unit – an essential capability for drug product manufacturing. Through debottlenecking and improving productivity measures in existing capacity, an increased number of batches were produced for other clients.
In the biologics development laboratories, the focus was on piloting high-yielding cell lines.
The outsourced biologics manufacturing market is thriving, providing an opportunity to leverage our advantage in terms of capacity, skills and experience.
With the added capacity, our focus will be to grow the base business and build a robust pipeline of customers to utilize the new assets in both human and animal health. The new facilities will be available for business in the second half of FY25.
In addition to pursuing capability builds with respect to both technology and people, the Company will continue to build supply chain resilience to reduce costs and increase digitization by adding manufacturing systems and automation within the manufacturing operations.
Over the last year, we have continued to make progress in strengthening our systems and processes and building our capabilities using Lean/Six Sigma, our approach to operational excellence, SQDECC (Safety, Quality, Delivery, Engagement, Cost, and Compliance), the Japanese concept of Kaizen as well as other excellence tools and methodologies.
In Discovery services, we optimized material costs to deliver savings while in small molecule development services, we have achieved global quality standards. The Mangalore manufacturing facility was approved by the US FDA with zero 483s. Separately, as a further milestone, the implementation of electronic lab notebooks for all science-based teams was completed during the year. Electronic lab notebooks increase accuracy, reduce human error and improve traceability for clients.
Within the large molecule CDMO, operational excellence initiatives included: introduction of electronic batch records, inventory management & planning, and automation of manufacturing processes, adding important capabilities for manufacturing.
During the year, operational excellence efforts were recognized by several forums including CII (Confederation of Indian Industry) national competition, QCFI (Quality Circle Forum of India) and ASQ (American Society for Quality).
Excellence is one of our core values and a daily concern for leaders at all levels. We will continue to educate all new joiners in white belt Six Sigma practices to drive a mindset of efficiency across the Company. Our use of Japanese management techniques such as Kaizen (the sourcing of ideas from employees) and Gemba walks (the practice of reviewing activities by engaging with employees on the front line) ensures that we have a steady flow of insights which can be used to improve efficiency and re-engineer processes. In addition, we will continue to invest in digitization and automation to increase speed, reduce costs and eliminate human error from core processes.
The Company made significant progress towards its strategic objectives of implementing effective succession planning and fostering a high-performance organization.
Thorough talent reviews were conducted for all divisions and essential functions. These sessions facilitated the identification of employees with high potential at various levels in the Company providing the basis for personalized development programs to prepare them for future opportunities. The Company is also collaborating with external partners to map talent outside the organization ensuring a broad approach to succession planning drawing on both internal and external candidate pools.
With the launch of “My Future Plan”, Syngene has transformed its approach to performance management and personal development. This program encourages employees to proactively manage their career paths by facilitating discussions around their goals, performance, and personal aspirations.
The annual Employee Experience survey unveiled important insights into employee needs and expectations, serving as the foundation for targeted action plans aimed at enriching the employee experience, enhancing engagement levels, and promoting a culture geared towards high performance.
As we move forward, the Company will implement strategic succession planning that extends beyond leadership roles to include all business-critical positions within the organization. This initiative will include clear career pathways for each individual and a comprehensive mapping of internal and external talent.
Underpinning a commitment to refreshing the organizational culture and values to build a stronger sense of inclusion and celebrate diversity, we plan to shape a cultural shift to enrich our workplace, attract top talent and align closely with global partners and clients.
To enrich our talent pool and foster innovative collaborations, the Company will strengthen its partnerships with leading universities and business schools. These collaborations will bring fresh perspectives into our research and operational strategies while offering a conduit for the inflow of new talent.
A key element of our ESG roadmap is our commitment to reducing our greenhouse gas emissions to make our contribution towards mitigating climate change. In FY24, we committed to science-based targets (SBTi) which will include identifying mitigation measures to reduce our Scope 1 and 2 greenhouse gas emissions by 50% by 2033. For our Scope 3 targets, we committed to a five-year supplier engagement target to ensure that suppliers representing 67% of emissions generated in the Scope 3 also make a commitment to SBTi targets.
During the year, we also set 5-year targets in each of the material topics identified by external stakeholders in the materiality assessment conducted in 2021.
Operating safely and responsibly lies at the heart of Syngene’s culture. As Syngene continues to grow and expand into new areas of research, development, and manufacturing services, we remain committed to taking full advantage of new technology and innovative thinking to manage the impact of our operations on the environment and the communities in which we operate.
Our SBTi commitment is part of our strategy to secure sustainable growth for the company. The Company will also continue its efforts to ensure equal opportunities for men and women while extending its activities in diversity, equity and inclusion to other groups.
We recognize the importance of working with key vendors who are essential to client delivery and we believe that raising their ESG performance will increase the resilience of our supply chain. The standards that we set for suppliers are a key part of our governance activity and we will continue to work closely with these vendors to promote sustainability and ESG best practices.
