IPO-bound Anthem Bio says cost arbitrage drove expansion, proposing China alternative for global pharma

IPO-bound Anthem Biosciences, a Bengaluru-based contract research development and manufacturing firm (CRDMO), will be the second such player to debut on stock exchanges in less than a year, and has positioned itself as a key alternative to global biotech and pharma majors in diversifying their supply chains. The management told Moneycontrol that it is now the second source for many Chinese products, and one of the fastest-growing CRDMOs in India.

“We’re now the second source for many products made in China, and the first choice for new ones,” Ajay Bhardwaj, CEO and Founder of Anthem told Moneycontrol in an interview.

Anthem’s IPO, opening on July 14, is a pure offer-for-sale of Rs 3,395 crore in which the private equity investor True North will be offloading shares along with promoters trimming stakes slightly. Post-listing, promoter holding will remain above 74%.

In December, Hyderabad-based Sai Life Sciences had completed a successful IPO - oversubscribed more than ten times - with institutional investors showing strong interest, betting on the sector's tailwinds. Since then, Sai Life has gained around 19% from its listing price of Rs 660 per share to trade near Rs 784.90 on BSE on July 10.

The supply chain diversification by global pharma, in addition to India’s scientific capabilities and cost arbitrage, made Anthem the fastest-growing CRDMO with revenue growing at a compounded annual growth rate (CAGR) of 24.8% and EBITDA growth of almost 30% in the last five financial years. The company ended FY25 with revenue of Rs 1844.6 crore and an EBITDA margin of 36.8%.

Among CRDMOs, Divi’s Laboratories led the pack with revenue of Rs 9,360 crore, and an EBITDA margin of 31.7% with a net profit of Rs 2,191 crore in FY25. Divi’s was followed by Syngene International with a revenue of Rs 3,642 crore, EBITDA margin of 29% and a net profit of Rs 496 crore. Sai Life Sciences recorded revenue of Rs 1,642 crore, an EBITDA margin of 24%, and net profit of Rs 173 crore and Cohance Lifesciences posted revenue of Rs 1,198 crore, an EBITDA margin of 31.3%, and net profit of Rs 265 crore. Divi’s and Cohance’s revenues also comes from active pharmaceutical ingredient (API) manufacturing, along with CDMO.

How Did it all Start?

Anthem Biosciences began its journey in 2006, with Ajay Bhardwaj, Ganesh Sambasivam, and K Ravindra Chandrappa as founders, who were all colleagues at Biocon and its subsidiary Syngene. Bhardwaj, while leaving Biocon in 2006, had a chance conversation with Dinesh (a colleague from Syngene) which sparked the idea of starting a company.Bhardwaj recollects their vision was to build a ‘company that does things differently, instead of replicating products or clients’ from previous pharma employers.

"We targetted small biotech firms that were under-served by larger CRDMOs, offering a fee-for-service (FFS) model - where clients pay only upon delivery - rather than the traditional full-time equivalent (FTE) model where clients are billed on the number of work hours," Bhardwaj said.

Its early bet on combining synthetic chemistry with fermentation and enzymatic processes paid off, enabling it to lead in complex modalities like peptides, ADCs, and oligonucleotides.

Capacity Expansion

While global pharma companies are jittery about outsourcing research and manufacturing of their prized assets to Chinese CRDMOs due to potential data or intellectual property (IP) breaches - in addition to supply chain disruptions and uncertainties of trade war – yet Chinese CRDMOs score over Indian companies in terms of capacity and execution speed, industry executives have said.

Bhardwaj said Anthem is attempting to meet this demand and is expanding aggressively with a capex investment of Rs 451.4 crore. The Unit III (NeoAnthem) is operational, and the unit IV is under construction on a 30-acre site at Harohalli, Karnataka, which will support both small and large molecule programs. Anthem’s proposed Unit V is planned in Hosur. By FY26, the company’s fermentation capacity is expected to reach 182 KL, and custom synthesis at 425 KL.

The company said it is sitting on a net cash of Rs 622.8 crore to fund this expansion.

Anthem’s client base includes more than 550 pharma and biotech firms, with top 5 customers contributing 70% of revenue, point towards concentration risk.“These are sticky relationships,” CFO Mohammed Gawir Baig said. “We’re embedded in their filings, their IP, their future.” More than half of Anthem revenue comes from US, followed by Europe, India and rest of Asia. The company’s facilities have passed multiple USFDA, PMDA, and TGA inspections with zero observations.