#Indegene is coming out with an #IPO on May 6.
CEO Manish Gupta and CFO Suhas Prabhu discuss the company's plans and prospects on #IPO Adda.
Read: https://bit.ly/3UK7TfN
CEO Manish Gupta and CFO Suhas Prabhu discuss the company's plans and prospects on #IPO Adda.
Read: https://bit.ly/3UK7TfN
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TVTranscript
00:00Hello everybody, welcome to IPO Atta. I am your host Varsha Chandani. Today we are going
00:05to talk about an upcoming IPO which provides digital services for the life science industry.
00:10The name of the company is Indigene Limited. Now, they assist with drug development, clinical
00:15trials, then sales and marketing support as well. IPO will be open from May 6 to May 8
00:22and if you talk about the total issue size around 1800 crore out of which fresh issue
00:27is 760 crore and rest is offer for sale. To talk more about the company, let's welcome
00:33Manish Gupta who is chairman ED CEO and Suhas Prabhu who is the CFO of the company. Welcome
00:40to the show sir. Thank you so much Varsha. Thank you for inviting
00:42us to the show. Pleasure is mine. Now, if you see Indigene
00:46provides digital services for the life science industry. Now, can you expand more on the
00:51business model please? Sure. So, before I go to the business model
01:00Varsha, just to point out for your audience, just give a bit of a more perspective because
01:06we are a very unique company, one of its kind definitely in the global context as well,
01:13but for sure in the Indian context, right. A very unique company. The company was formed
01:20with the premise of bringing very deep medical and healthcare expertise along with technology
01:26expertise and solve various problems in the healthcare industry. We define our purpose
01:30as helping healthcare organizations be future ready. That's how we started the company and
01:35we have stayed true to that course over these last 25 years.
01:41In the marketplace, we are known as a digital first commercialization partner to the global
01:45life science industry and by global life science industry, we mean pharmaceutical companies,
01:52medical device companies and the biotech industry. Today as Indigene, we work with 20 of the
01:5820 largest pharmaceutical companies in the world and 69% of our revenues come from these
02:04top 20 global pharmaceutical companies itself. We have close to 5200 employees, just short
02:11of 5200 employees. 20% of these come from a medical background. These are medical doctors,
02:19PhDs, pharmacologists who are working hand in hand with data scientists, data engineers,
02:24analytics folks, software engineers, and people like brand strategists, omni-channel orchestrators,
02:31creative directors, so a very diverse set of profiles coming together and coming together
02:37across the world. Through our 17 offices across the world with a large footprint in
02:45North America, very significant footprint in many countries in Europe, office in Tokyo
02:51and in Shanghai, we service the LATAM market through our office in Mexico. So very diverse
03:00and highly specialized people coming together, coming together from different parts of the
03:04world to deliver solutions to our clients day in day out. Most of our solutions and
03:11contracts are global in nature, which means we are empanelled by a pharmaceutical company
03:15to help them or support them in let's say 30 countries, 40 countries, and that's the
03:20reason we have all these offices and very specialized capabilities across the world.
03:25I'm going to just spend a minute to explain what we mean by digital first commercialization,
03:31because it's a very new concept, at least in this market. If you take the patent-driven
03:37global pharmaceutical industry, this is the innovation-driven industry, you work in the
03:43lab and it doesn't matter whether it's a new chemical entity or a biologic, once you have
03:50enough data being generated in the lab, you do two things. One is you file for a patent,
03:54and the second thing is you go to FDA to see if you can get permissions to do or get trials in
04:00humans. Patent is typically 20 years, and if you get a permission to do trials in humans,
04:07that takes around five to eight years and is anchored by a clinical development team in the
04:12pharmaceutical industry. Along this clinical development team, there's another team called
04:18regulatory affairs, which steps in. As you can imagine, this is again a very specialized medical
04:23team, which is thinking about regulatory strategy, is still looking at the data and saying how can
04:29we make the submissions to FDA to get approvals as quickly as possible. The regulatory team is
04:34also responsible for managing regulatory compliance for marketed products. Think about a large
04:39pharmaceutical company present in 80 countries, let's call it 50 products, they're going to be
04:44compliant in all the geographies you're operating in from a medical perspective. The regulatory team
04:48is the one who does that. A bit more ahead, there's another team called medical affairs. As
04:53the name suggests, this is a team, again, medical in nature, sitting between the R&D teams and
04:58the sales and marketing team responsible for building medical advocacy with the product. This
05:03is a team which is looking at the clinical data getting generated, thinking about which journals
05:08to publish this data in, which conference to share this data in, what kind of advisory board to build,
05:13of key opinion leaders who are physicians to build medical advocacy of the product. This team,
05:20again, is responsible for various processes for marketed products, things like promotional
05:25medical review, medical information management, there is a role called medical service liaison,
05:30all this is anchored in the medical affairs team. Next is the sales and marketing team,
05:36which step in to manage the launch of the product, manage the growth, maturity and decline. Just
05:41think about the entire product lifecycle. And sales and marketing in the pharmaceutical industry is
05:47the largest spend, right, by far. And this is a team which manages it. When the product is in the
05:54market, you might have a safety issue related to that. Somebody took a drug, there was an adverse
06:01event related to that, a patient or a physician or a caregiver might report it to the company. As
06:07you can imagine, it's a highly regulated process. Pharma industry has to take a few steps and then
06:13finally this gets reported to the regulator. That whole process is called safety pharmacovigilance.
06:18So think about all these processes outside of the lab, clinical trials, regulatory, medical affairs,
06:24sales and marketing, safety and pharmacovigilance. That's all we call it pharmacovigilance,
06:30bringing a product from the lab to the market. Now that's been done for decades. We as Indigene
06:34step in and say we can help the industry design and run, execute these processes day in day out
06:43with a digital first approach, right? Reimagine these processes and execute them in this world
06:49of digital and AI and that's what we do every day. So just more on this business model. So
06:55actually you bring the product to the market. So you're not, you won't be called as contract
07:00research organization, right? So we, if you think about, if you see our four segments in which we
07:12break our business, one of them is called enterprise commercial solution, which is 59% of
07:18our revenues. The other one is omni-channel activation, which is 12% of our revenues. We
07:24have a segment called enterprise medical solutions is 23% of our revenues. And there's others,
07:30which includes a bunch of things, which is 6%. Now enterprise commercial solutions is 59 and
07:37omni-channel activation 12%. You could think about this as sales and marketing, helping
07:42pharmaceutical companies drive sales and marketing across the world, across their products using a
07:48digital first approach. That's what we do, right? And that's more than 70% of our revenues today.
07:5323% of our revenues is helping pharma companies manage regulatory, medical affairs and drug
08:00safety and pharmacovigilance using a digital first and AI driven approach. From a business
08:08model perspective, we engage with pharmaceutical companies on two fronts. As you can, the name
08:13suggests enterprise commercial solutions and enterprise medical solutions are enterprise
08:18engagements we have with our clients, where we are helping them across countries, across
08:24brands, right? And across therapy areas on a recurring basis to manage fairly complex
08:32commercial and medical processes, right? We get contracted for a long period of time and
08:37execute these processes on a long period of time. Omni-channel is a very specialized
08:43local way of engagement in some of the important geographies, large geographies rather, from
08:49a spend perspective, like United States and Europe, where we directly work with brand teams.
08:54Mr. Gupta, your RHP says we do not have listed peers in India. So why there is not much competition
09:03when it comes to our company per se? So, at one level, it is a matter of, I would
09:13say there is no competition, right? It is just that we compete with a very, it is just
09:18how the company has evolved, right? All these years, we are a 25 year old company, which
09:23got started with the whole idea of bringing medical expertise and technology expertise
09:29to solve problems for this industry. If you think about our medical and domain expertise,
09:35right? It is very, very strong. We started off with that, our procedures, the way we
09:40understand processes, interlinkages between, I explained regulatory, medical affairs, safety,
09:45all these things finally are linked, right? Understanding the underlying linkages between
09:50all these. And then on top of that, what we have done for a very long period of time,
09:55given our DNA of also having technology, we have invested in technology tools and platforms,
10:00which encapsulate this domain knowledge, right? And provide a very fair amount of differentiation
10:08to our clients. That is the reason we are able to work with 20 of the top 20 pharmaceutical
10:16companies and have very long standing relationships with them. We end up competing with life science
10:21specialists, the likes of CROs you mentioned, contract sales organization, most of them
10:25who are in the US and Europe. And sometimes we also compete with some of the IT companies
10:31who try to bring in the technology expertise, right? Obviously, but lack the domain expertise
10:37we have.
10:38Prabhu, now, just speaking about the financials, your revenue growth in FY23 has been 38%,
10:44while in nine months, FY24 growth is about 15%. Now, what is the trajectory going forward?
10:51Let's say for next three years?
10:57So let me just take a step back and give you a perspective on this part. You spoke about
11:06our growth of FY23 as 38%. But if you take a three year trajectory from FY20 to FY23,
11:16that is north of 50% growth. We are servicing a very large market today. If you see the
11:25global life science industry, it's north of $1.1 trillion in size, and it's slated to
11:31be $2.1 trillion by 2026. If you see the operational spend, which has been called out in our RHP
11:40industry report, it is north of $156 billion and slated to be north of $200 billion by
11:492026. So you're talking about very large spend. And by the way, more than 35% of these spends
11:53are on sales and marketing. There are a few trends that are at play. One is that especially
12:00on sales and marketing, that there is more and more shift towards digital way of doing
12:06things rather than the physical way of doing stuff. There is more and more shift to digital
12:09approaches. There's also more centralization. And companies are also preferring partners
12:17that have digital capabilities and a global footprint of ours. So if you combine this
12:24very large market and a market where the tailwinds or the trends are shifting towards digital
12:34and technology, combined with our deep medical expertise, deep domain expertise, strong technology
12:40platforms, and by the way, a very credible customer base for a very long period of time,
12:45we feel good about the future.
12:48So can we expect 25 to 30% in revenue growth, I mean, for next three years?
12:58I'll point you towards, as I mentioned, our growth rate from FY20 to FY23 was north of
13:0650%. And it's a very large market. I'm not going to give specific guidance for the next
13:15few years. But as I mentioned, it's a very large market. We are very uniquely positioned
13:20in this large market. And hence, we are excited about the opportunity in front of us.
13:26Okay, Mr. Suhas, now my question to you is your EBITDA margin has been volatile. If you
13:31see from 27% in 2021 to 21% in nine months FY24, any reason for the same? And what is
13:38the sustainable margin one can expect?
13:41Yeah, the high margins that you spoke about, which was in the year of COVID. And if we
13:51set that aside, over the last three periods that you mentioned, we've consistently grown
13:58our EBITDA margins from 18.8% to 21.9% through the period. And we feel that our focus is
14:11not just on growth, but growth with profitability has resulted in this strong performance on
14:19the margin front.
14:21Well, my last question to you is, is this US biotech, a low funding pressure has affected
14:27you in any way?
14:28So the biotech revenues are 3% of our revenues. So that's the exposure we have, right? 69%
14:44of our revenues come from the top 20 pharma companies who all of them are clients, a very
14:49large 93% of our revenues comes from large and midsize pharmaceutical companies. 3% is
14:56medical devices, 3% are biotech. These are segments we are bullish about in the long
15:00run, and we believe can grow. But nevertheless, today, are a very small percentage of our
15:06revenues.
15:07Just last question before I let you go. This, the funds that you're raising, what are you
15:14going to do this funds? I mean, what are you going to use for this?
15:22So I'll pass it on to you.
15:24So about 391 crores out of the 760 crores that we are raising as part of the IPO would
15:34go towards retiring an existing loan that we have in one of our subsidiaries. And another
15:44part would be used for future CAPEX requirements of the company. And we have about 35% of the
15:54proceeds which has been allocated towards general corporate and future potential inorganic
16:01opportunities that the company may come across.
16:04Well, thank you so much, Mr. Gupta and Mr. Prabhu for joining us. All the best for the
16:10IPO and for your business.