Suven Pharma looks for 6x increase in revenue by FY35

Suven Pharmaceuticals, a contract development and manufacturing organisation (CDMO), has outlined its goal of increasing its revenue from Rs 2,635 crore in the fiscal year ending September 2024 to Rs 8,000 crore by FY30 and Rs 16,000 crore by FY35. This ambitious growth is set to be driven through both organic expansion and strategic acquisitions, according to a report by multinational financial services firm J.P. Morgan.

Currently, Suven has 16 commercial molecules and seven Phase III molecules in its pipeline. Recently, one of its Phase III drugs received a positive readout, and a molecule from its Cohance platform gained approval from the United States Food and Drug Administration (FDA).

In the past four years, Suven has expanded its capabilities with the acquisition of six assets, including Cohance Pharmaceuticals and Sapala Organics, focusing on areas such as antibody-drug conjugates (ADCs) and oligonucleotides. 

Analysts at J.P. Morgan noted, “Suven’s acquisitions have significantly enhanced its position in complex pharmaceutical segments, positioning the company for sustained growth.”

The company’s Pharmaceutical Contract Development and Manufacturing Organisation (CDMO) segment, which contributes 48% of its sales, includes small molecules, antibody-drug conjugates (ADCs), and oligonucleotides. These segments are expected to continue experiencing growth. J.P. Morgan analysts highlighted that “small molecules, ADCs, and oligonucleotides accounted for over 50% of new drug additions to the global pipeline in 2024, and Suven’s strong presence in these areas gives it a competitive advantage over its peers.”

Financially, Suven has demonstrated consistent performance, with an earnings before interest, tax, depreciation, and amortisation (EBITDA) margin of approximately 37%. The company has also posted returns with an average return on capital employed (ROCE) of 41% and a profit after tax (PAT) margin of 24.1% over the past five years. Analysts from J.P. Morgan said, “Suven’s superior returns compared to both domestic and international peers clearly reflect its strong financial standing.”

Looking to the future, Suven’s Horizon 2 initiative – which includes plans to incorporate capabilities in flow chemistry, messenger ribonucleic acid (mRNA), and peptides by fiscal year 2030 – is expected to enhance the company’s position in advanced drug modalities. J.P. Morgan analysts observed, “Suven’s strategic focus on emerging technologies such as mRNA and peptides aligns with industry trends and should drive future growth.”

Suven is also prioritising its environmental, social, and governance (ESG) objectives, which include reducing emissions, transitioning to renewable energy, and enhancing the health and safety of its employees. The company holds certifications such as ISO 450001:2018 and has received commendations in sustainability assessments. Another analyst from J.P. Morgan noted, “Suven’s ESG initiatives underscore its commitment to sustainability and long-term value creation.”

According to J.P. Morgan’s report, the demand for complex drug modalities like ADCs and oligonucleotides is expected to rise, placing Suven in a favourable position to benefit from this growing market. Analysts further said, “With ongoing investments in high-growth areas and strategic acquisitions, Suven is well-positioned to meet its revenue targets and capitalise on the evolving pharmaceutical landscape.”