Indegene Limited IPO Summary

About the company:

Established in 1998 by Dr. Rajesh Nair, Manish Gupta, Gaurav Kapoor, Dr. Sanjay Parikh, and Anand Kiran, Indegene Limited has emerged as a prominent player in the dynamic landscape of the life sciences industry. The company provides digital-led commercialization services for the life sciences industry, including biopharmaceutical, emerging biotech and medical devices companies, that assist them with drug development and clinical trials, regulatory submissions, pharmacovigilance and complaints management, and the sales and marketing of their products. Their solutions enable life sciences companies to develop products, launch them in the market, and drive sales through their life cycle in a more effective, efficient and modern manner.

Indegene achieves this by combining over two decades of healthcare domain expertise and fit-for purpose technology. Their portfolio of solutions cover all aspects of commercial, medical, regulatory and R&D operations of life sciences companies. They have established client relationships with each of the 20 largest biopharmaceutical companies in the world by revenue for the Financial Year 2023 (Source: Everest Report), having earned more than 69.00% of their total revenue from operations for each of the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021 from these 20 customers.

As of December 31, 2023, the company had a total of 65 active clients (i.e., clients from whom they earned US$0.25 million or more in revenues during the 12 months preceding the relevant date). Positioned at the intersection of healthcare and technology, their solutions span across different stages of the commercialization lifecycle of drugs and medical devices. Set forth below is a description of their solutions:

● Enterprise Commercial Solutions: Their Enterprise Commercial Solutions primarily involve assisting life sciences companies with their digital marketing operations.

● Omnichannel Activation: Their Omnichannel Activation solutions help life sciences companies leverage a “digital first” approach for optimizing the last-mile promotion of biopharmaceutical products and medical devices to health care professionals across multiple channels.

● Enterprise Medical Solutions: Under their Enterprise Medical Solutions, they establish centers of excellence to consolidate large scale regulatory and medical operations for their clients.

● Others: They also offer Enterprise Clinical Solutions and consultancy services. Their Enterprise Clinical Solutions help drive efficiencies in the drug discovery and clinical trial operations of life sciences companies

Industry Overview:

The life sciences industry comprises entities engaged in the research, development, and manufacturing and marketing of drugs and medical devices.

The two main segments within this industry are the biopharmaceutical and medical devices segments:

• Biopharmaceutical: This segment comprises companies that discover, develop, manufacture, and sell drugs (chemical and biological-based) to cure, vaccinate, or alleviate symptoms of medical conditions or diseases.

• Medical devices: This segment comprises companies involved in the research, development, production, and sale of systems and devices of medical applications, i.e., to treat or diagnose diseases or medical conditions. )

The combined sales of the biopharmaceutical and medical devices segments was estimated at ₹138.3 trillion (US$1.8 trillion) in 2023, with biopharmaceuticals constituting 69% or ₹95.4 trillion (US$1.2 trillion). By 2026, the combined sales of the biopharmaceutical and medical devices segments are expected to reach ₹163.5 trillion (US$2.1 trillion) with biopharmaceuticals constituting 69% or ₹113 trillion (US$1.4 trillion).

Life sciences operations overview:

Life science companies undertake several activities to discover, manufacture, and market their products. These processes referred to as life sciences operations can be categorized into five broad value chain segments:

● Drug discovery and clinical trials

● Regulatory and medical affairs

● Marketing and sales

● Pharmacovigilance or complaints management

● Manufacturing, supply chain and distribution

Operations spend split by geography :

** Rest of the World (ROW)

Challenges faced by the life sciences industry:

● Pricing and margin pressures and value-based pricing models

● Only a fraction of the overall drugs approved are reaching blockbuster status. (Blockbuster drugs refer to drugs with annual gross sales greater than US$1 billion.)

● Impact of economic slowdown in 2023

● Increasing product recalls

Financials:

The following table sets forth a breakdown of their revenue from operations by each category of solutions for the periods indicated.

The company’s revenues from operations have increased steadily from Rs. 966.27 Cr (FY2020-21) to Rs. 2,306.13 Cr (FY22-23) at a CAGR of 54.4%.

There’s a notable increase in the company’s EBITDA from Rs. 263.9 Cr from FY2020-21 to Rs 454.1 Cr FY2022-23 at a CAGR of 31.18%.

The PAT increased from Rs. 185.68 Cr in FY 2020-21 to Rs. 266.10 Cr in FY2022-23 at a CAGR of 19.19%.

Valuation:

Due to the unique nature of Indegene Limited's business operations, there are no listed companies in India or globally that directly engage in a comparable line of business. Consequently, relative valuation metrics, such as price-to-earnings (P/E) ratio or price-to-sales (P/S) ratio, are not applicable for assessing the company's valuation.

Risk Factors:

● Their business is solely focused on the life sciences industry and may be adversely impacted by factors affecting the life sciences industry, including the growth of the overall life sciences industry, outsourcing and other trends.

● As their business is solely focused on the life sciences industry and a significant portion of their business is attributable to certain large clients located in North America and Europe, their business and profitability is dependent on factors affecting the life sciences industry and their continuing relationships with such key clients.

The following table sets forth their revenues from operations from their top five customers and top ten customers, respectively, in absolute terms and as a percentage of their total revenue from operations, for the periods indicated.

● The life sciences operations industry is highly competitive, and it is difficult to predict their future prospects

IPO Objectives:

The company proposes to utilize the net proceeds toward the following objectives:

● Repayment/prepayment of indebtedness of one of their Subsidiaries, ILSL Holdings, Inc.

● Funding the capital expenditure requirements of their Company and their Material Subsidiary, Indegene, Inc.

● General corporate purposes and inorganic growth.

IPO Details: