Indegene Limited (Subscribe)

Highlights

Indegene Limited (INDL) incorporate in 1998, 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 complaint 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. INDL’s portfolio of solutions cover all aspects of commercial, medical, regulatory and R&D operations of life sciences companies.

The company positioned at the intersection of healthcare and technology, their solutions span across different stages of the commercialization lifecycle of drugs and medical devices. Their (i) Enterprise Commercial Solutions and (ii) Omnichannel Activation Solutions cater to the commercial functions of life sciences companies, while their (iii) Enterprise Medical Solutions and (iv) Enterprise Clinical Solutions cater to their medical and R&D functions.

The company has delivered solutions to 65 clients from their operation hubs located across North America, Europe and Asia. They have internally developed artificial intelligence (AI) and machine learning (ML) based proprietary platforms, which allow them to offer solutions across the globe at scale.

Out of the total proceeds of Rs. 18,417 mn, Rs. 3,913 mn would go towards repayment/prepayment of the indebtedness of one of their material subsidiaries ILSL Holdings, Inc. Rs. 1,029 mn would go towards funding the capital expenditure requirements of the company and one of their material subsidiaries, Indegene, Inc. Rs. 2,657 mn would go towards general corporate purposes and inorganic growth and Rs. 10,817 mn would go towards existing selling shareholders of the company.

Key Highlights

• The life sciences industry primarily comprises biopharmaceutical companies and medical devices companies, whose combined sales were estimated at Rs. 138.3 trillion (USD 1.8 trillion) in 2023, with biopharmaceutical companies constituting 69 pct or Rs. 95.4 trillion of such sales. The combined sales of biopharmaceutical companies and medical devices companies are estimated to reach Rs. 163.5 trillion by 2026. Life sciences operations expenditure was estimated at Rs. 12 trillion in 2022 and is expected to grow at a CAGR of 6.5 pct to reach Rs. 15.5 trillion in 2026.
• Since 2005, they have successfully executed 13 acquisitions and have benefited from the synergies, networks, technologies, and talent pools of the companies that we have acquired.
• As a part of their strategy, they continue to strengthen their go to market engine, which involves: (i) deepening their relationship with existing clients, including each of the 20 largest biopharmaceutical companies globally in terms of revenue for the FY23, and tapping into cross-sell, up-sell and geographic expansion opportunities; (ii) expanding their customer base to biopharmaceutical companies beyond such 20 largest biopharmaceutical companies (iii) making inroads into new market segments (iv) focusing on high value opportunities with key clients and (v) scaling nascent business verticals.
• The company aims to expand the scale and scope of its operations by continuing to invest in technology. They have also been working on new Gen AI-enabled solutions that can help them improve their clinical, pharmacovigilance and regulatory offerings and increase their market share in these areas.
• Sales of the company has grown by ~54.5 pct CAGR during the period FY21-23 while adjusted EBITDA and profit grew ~31.88 pct and ~19.72 pct CAGR over the same period respectively. During FY23, company reported sales of Rs. 23,061 mn which increased by ~38.54 pct YoY, while adjusted EBITDA increased by 45.12 pct YoY to Rs. 4,541 mn as EBITDA margin improved from 18.79 pct in FY22 to 19.69 pct in FY23. As of FY23 the company reported profit of Rs. 2,660 mn which was increased by ~63.43 pct YoY. During 9MFY24 the Sales/EBITDA/Profit came at Rs. 19,166 mn/Rs. 4,198 mn/Rs. 2,419 mn which was up by 14.50 pct YoY/22.21 pct YoY/11.33 pct YoY.

Key Risk

• INDL’s business is solely focused on the life sciences industry and may be adversely impacted by factors affecting the life sciences industry.
• The majority of the company’s revenues are derived from its subsidiaries (79.56 pct from Indegene Inc., 13.98 pct from other subsidiaries). Any disruptions in the operations of one or more of their subsidiaries may adversely affect their business.

Financial Performance and KPI’s

Valuation

Indegene is a unique player in digital-led commercialization services and the life science industry. It enjoys a virtual monopoly in its business.  At the upper end of the price band, the issue quotes at PE of 33.5x its FY24E earnings. One can subscribe from a longer-term perspective.

Also read: Why Is Financial Advisory Important?

Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Investing using the app is the sole decision of the investor and the company or any of its communications cannot be held responsible for it.