Syngene International, one of the first players in the CRAMS (Custom Research And Manufacturing Services) segment, was spun off from the Indian biotechnology company Biocon to offer contracted R&D capabilities and is now a fully integrated player. When global pharmaceutical majors like Glaxo Smith Kline, Bristol Myers Squibb, Amgen or Baxter need a reliable partner to co-innovate today, they turn to Syngene.
Jonathan Hunt, Managing Director and CEO of Syngene, spoke with Activity area on what sets the company apart in the competitive CRAMS space and on the way forward. Extracts:
Recently, Amgen renewed its research collaboration contract for an additional five years. You seem to have loyal customers who work with you for longer periods of time instead of the traditional industry standard. What is different?
It’s because of our business model. What we do, including the way we operate, does not have a lot of precedent in India. Some people tend to think of us as just another offshoot of the Indian generic industry, but we are not. We are a science and innovation driven service company.
Inside our campus, the mindset is that we are a Food & Drug Administration (FDA) of the People’s Republic of the United States. We operate in a highly regulated industry that has checks and balances outside of governance and rigor. We operate to a single global scientific standard, driven by excellence and a high compliance regulatory mindset. Whether it’s the US FDA, European or Indian regulators, we meet and exceed their standards every day. This is one of the things that reassures our global customers.
We don’t do much with Indian partners as the Indian life science industry is not yet fully innovation driven. Our global partners range from companies in Australia to Japan, Europe and, of course, North America. What they are looking for is intellectual collaboration and added value.
Twenty years ago, we approached a company like Syngene for something scientifically simple but well done. However, today they come to Syngene because we can intellectually match their thoughts and innovations, debate with them, add value, collaborate and advance science with them.
Weren’t CRAMS or even CDMO (Diagnostic and Manufacturing Contract) services offered earlier by a number of players including Divi’s and Cadila?
Not really. Unfortunately, the nomenclature does not help. It’s like alphabetical spaghetti in some ways with CRAM, CDMO, or R&D discovery services.
Our goal as a company is more focused on research and innovation, the front end. So think of us, primarily, as scientists in laboratories performing innovative experiments. If you look at some of the companies you mentioned eg Divi I think it’s a really good company. However, they are downstream of that, in the making. And they do it well, but it’s different to innovate upstream in the value chain. We are therefore a little further upstream.
Mainly where we overlap is manufacturing. If you look at the past few years, some capital investment and expansion that we have put in place has gone into increasing our development organization. We operate across four different divisions – Discovery Services, the traditional core and, in value and volume, the largest today; Dedicated Centers, a specialized form of discovery research for Amgen; Development Services, the laboratory scientists who develop formulations and processes; and Manufacturing, where we determine how you do things at scale.
Divi, for example, is particularly strong at manufacturing. In the pharmaceutical industry, the average time between an idea and the marketing of a product would be 10 to 12 years. We work a lot in years 1/2/3, even in year 4. Some of the organizations you describe are more active in years 7/8/9/10.
Is such co-innovation reflected in your margins?
Globally, among our Chinese, European, Indian and other competitors, our margin structure is above average and often in the top quartile. It may vary slightly depending on what we’re doing on the capital spending side. We have been a high growth company for a decade or more and we are constantly growing and developing. Some margins are therefore squeezed by this type of investment.
The more you are seen as a scientific equal and a source of good ideas and problem-solving solutions, the clingier the clients and the longer the contracts. We have created a culture, a workforce and a set of processes that add value and we want to contain and protect it. So we’ve strived to become an integrative drug discovery platform that allows us to sit down, not only with big customers, but with players of all sizes. Today, our customers are eight of the top 10 and 18 of the top 25 biopharmaceutical companies in the world.
We offer a good choice for innovative biotech start-ups. We are (almost) a 30-year-old company of breadth, breadth, depth and real experience that they can collaborate with. Because they are small organizations, they don’t have a lot of departments to handle contracts, relationships, and outsourcing. They want to meet as scientific collaborators and that we really contribute to their growth.
You have over 400 clients. Beyond the pharmaceutical sector, what other segments are growing?
The animal health segment is developing well. Six of the top 10 animal health companies have backgrounds as divisions within pharmaceutical companies. We also have clients in the field of nutraceuticals and cosmetics. They are a good complement to our core business. But in reality, the core business is human health, whether it is pharma or biotechnology, large-cap companies or innovative start-ups.