About Sai Life Sciences Limited

Sai Life Sciences is an innovator-focused, contract research, development, and manufacturing organization (“CRDMO”). They provide end-to-end services across the drug discovery, development, and manufacturing value chain, for small molecule new chemical entities (“NCE”), to global pharmaceutical innovator companies and biotechnology firms. They possess both (a) discovery / contract research (“CRO”) and (b) chemistry, manufacturing, and control (“CMC”) / contract development and manufacturing organization (“CDMO”) capabilities. They are also one of the few CRDMOs to have a differentiated delivery model of having research laboratories for discovery and development located near overseas innovation hubs at Watertown (Greater Boston, MA), United States (“US”) and Manchester, United Kingdom (“UK”), complemented by large-scale research laboratories and manufacturing facilities in cost competitive locations in India. During the Financial Year 2024, they served more than 280 and 230 innovator pharmaceutical companies, respectively, including 18 of the top 25 pharmaceutical companies (in terms of revenue for the calendar year 2023), across regulated markets, including the US, the UK, Europe and Japan. During both the Financial Year 2024 and six months period ended September 30, 2024, they also provided CRO services to more than 60 customers, respectively, on an ongoing basis, for their integrated drug discovery programs. As of September 30, 2024, their CDMO product portfolio included more than 170 innovator pharmaceutical products, including 38 products that were supplied for manufacturing of 28 commercial drugs.

As of September 30, 2024, Sai Life Sciences had 3,135 employees, with capabilities across the CRDMO value chain. The Bankers of the Company are Bank of Baroda, Kotak Mahindra Bank Limited and ICICI Bank Limited.

CRDMO Industry
CRDMO industry primarily comprises of 3 key types of players: CRDMOs (Contract Research Development and Manufacturing Organizations), Contract Research Organizations (CROs) and Contract Development and Manufacturing Organizations (CDMOs). CRDMOs are integrated contract service organizations which provide end-to-end services spanning the entire drug discovery, development, and manufacturing lifecycle. They provide pharmaceutical innovators with economically viable and tailored solutions for the various challenges they face across the value chain. By leveraging their expertise, infrastructure, and resources, pharmaceutical innovators can accelerate the drug development process, reduce costs, and access specialized capabilities that may not be available inhouse.

CROs specialize in offering various scientific functions of the discovery, preclinical and clinical stages of pharmaceutical R&D. CDMOs provide commercialization manufacturing as well as process/formulation development to support the preclinical and clinical stages (also known as Chemistry, Manufacturing and Control (CMC) services).

India CRDMO Industry
India CRDMO industry stood at USD 4.0 billion (INR 336 billion) in 2018 and reached USD 7.3 billion (INR 609 billion) in 2023, growing at a CAGR of 12.6% between 2018 and 2023. By 2028, the industry is anticipated to reach USD 14.1 billion (INR 1,173 billion) by growing at a CAGR of 14.0% over the period of 2023 to 2028. Indian CRDMO industry has observed a significant growth in the recent years on the back of increased collaborations, partnerships and collaborations in the industry. Amongst the value chain functions, pre-clinical development is expected to grow at a significantly faster pace at 15.7% during FY23-28F, driven by significant improvement in technical capabilities of Indian companies driving R&D outsourcing demand from global pharma innovator companies. Bolstering of integrated offerings by Indian companies with increase in Biology and DMPK capabilities is driving significant growth in discovery and pre-clinical segments.

Indian CRDMO industry has largely been dominated by small molecules with their proportion constituting 90%+ of the total industry in 2023. With increasing prominence of Indian CRDMOs in the global markets and increased outsourcing of small molecules, the dominance of small molecules is expected to continue despite increasing demand of large molecules. The Indian small molecule CRDMO industry size is estimated to increase to USD 12.8 billion (INR 1,064 billion) by 2028 and with a compound annual growth rate (CAGR) of 13.7% from 2023 to 2028.

Non-Clinical CRO SAM refers to the global small molecule Non-Clinical CRO industry. Driven by shift in global dynamics due to China plus one, Biosecure act and other factors and increasing capabilities of Indian companies, India small molecule Non-Clinical CRO is expected to grow at a faster rate and become a USD 1.0 billion (INR 82 billion) industry by 2028.

Small Molecule Innovator API CDMO SAM refers to the global small molecule innovator API CDMO industry. With multiple growth tailwinds for the India CDMO industry, it is expected to gain market share and become a larger proportion of CDMO SAM, accounting for 10%+ share by 2028F.

Indian CRDMOs have demonstrated enhanced capabilities including availability of skilled talent, economical cost base, quality infrastructure and systems adhering to GLP and cGMP standards, positioning them to benefit from increased R&D and manufacturing outsourcing by pharmaceutical innovators. Tightening of IP protection laws have further strengthened confidence in Indian CRDMO providers among global pharmaceutical companies. Geographically, Indian CRDMOs are strategically best positioned to be part of a de-risked supply chain sought by European and American companies. 

SAI LIFE SCIENCES LIMITED COMPETITIVE STRENGTHS
1. One of the largest integrated Indian CRDMOs in terms of revenue from operations for the Financial Year 2024, acting as a one-stop platform for discovery, development and manufacturing
2. CDMO platform with a diverse mix of commercial and under-development molecules
3. Fast-growing, integrated Discovery capabilities with focus on biology, chemistry and DMPK services
4. Modern R&D infrastructure with a differentiated delivery model and strong regulatory track-record
5. Experienced management team and Board supported by a qualified scientific talent pool
6. Strategic business investments with improving profitability metrics

SAI LIFE SCIENCES LIMITED GROWTH STRATEGIES
1. Increase cross-selling with existing customers and win new customers
2. Continue to build a strong commercial development and manufacturing portfolio of CMC capabilities
3. Pursue more integrated Discovery projects to drive customer stickiness along with larger integrated Discovery programs
4. Continue to expand their existing capacity and add new technical capabilities
5. Continue to drive operational excellence initiatives to improve profitability and return metrics
6. Continue to attract, train and retain quality talent to support their rapid growth

SAI LIFE SCIENCES LIMITED RISK FACTORS & CONCERNS
1. The financial performance depends on their ability to secure business from biotechnology and pharmaceutical customers.
2. The business may be adversely affected if the customers fail to develop or manufacture commercially viable drugs, including due to industry specific challenges they may face.
3. The largest customer contributed 8.00% and 9.55% of the total revenue from operation for the six months period ended September 30, 2024 and the year ended March 31, 2024 respectively. 
4. They conduct animal testing, which can result in adverse publicity liability and other issues.
5. They purchased 14.88% and 11.43% of the cost of material, chemicals and reagents consumed from their three largest suppliers for the six months period ended September 30, 2024 and the Financial Year ended 2024, respectively.