Syngene International Limited (SYNGENE.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Syngene International's webinar on Clinical Trials Market by Dr. Mrinal Kammili, Head, Translational & Clinical Research at Syngene. [Operator Instructions] I now hand the conference over to Ms. Nandini Agarwal. Thank you, and over to you.

Thank you, and good afternoon to everyone. Thank you for joining us on this webinar today. So just in terms of agenda, we will cover some introductions, and then Dr. Mrinal will share his insights on the clinical trial industry and Syngene's Translational & Clinical Research business, with the NCR business, what we call. And then in the end, there'll be opportunity to ask questions. So why we thought of doing this webinar? Last quarter, we announced the global Phase III clinical trial deal, and we've got a lot of questions from many of you around understanding the industry a bit more, the operating model. And what is Syngene doing right now in the translational and clinical research business. So we thought it would be a good time to talk about these topics of it. So this webinar is focused on the industrial understanding, what Syngene is in the T&CR business. And please note that we'll not be able to provide any specific Syngene financials at this point in time. So this webinar will be led by in-house expert, Dr. Mrinal Kammili. He joined us in January 2025 and is part of the Syngene Executive Committee. He comes with deep experience of over 27 years of an experienced organization leading into research business, including his stint at Lambda Therapeutics. In Syngene, he'll be responsible for driving the business in the Translational & Clinical Research for us. Over to you, Dr. Kammili.

Thank you. Thank you, Nandini, and good afternoon, everyone. Thanks for having me on this. I would like to start off by giving an overview of what the entire clinical research market looks like right now, and I'll be covering areas not limited only to clinical CRO, but even the pre-clinical space and the overall CRDMO space as well. As is evident from the slide, the overall market is close to around USD 330 billion from a CRDMO perspective. But if I have to specify and be very specific only to the clinical part, we are looking at almost close to $100 billion market, growing at a CAGR of around 11%. This is one of the most exciting spaces today. And the reasons why I feel so we have tried to outline and the key growth drivers on why our assumption of this market growing at the rate which we are predicting it to grow. And not limited to the reasons outlined, major -- one of the important factor is the increasing R&D pipeline as is evidenced from global pharmas, especially on the innovator and the biotech space. There is an increasing R&D pipeline for which clinical trials are required. And there is an outsourcing of -- there is an accelerated outsourcing happening across. And I'll come through specifics on why I feel India is the destination to be in. There are various reasons why India is becoming attractive from a global pharma landscape and not limited only to the innovator, but also to the biotech space and the generics space. One of the key reasons I feel is the patient diversity and the ease of recruitment. There is a rising demand today and most of the global health authorities, especially the U.S. FDA, the EMA, MHRA, everyone now requires multi-regional and multiethnic populations to be included. So diversity is a key component, which is becoming a part of a need, I would rather say, for obtaining marketing approvals. So this brings India into the picture as a very attractive destination in terms of ease of recruitment, diversity of the population, the increasing incidence of various diseases in India. And I think, if I look at the way the infrastructure is shaping up in India, and I'll speak more about it in the coming slides. But all these factors put together makes India a very attractive destination today for the clinical research space. And this is not limited only to Phase II or Phase III global trials, but inclusive of a little bit of translational, a little bit of early phase, a little bit of late phase as well. From a market outlook perspective, as is evident in the trials, while North America still dominates most of the R&D pipeline and the trials which happen still less concentrated in North America. There are various regions which are now expanding into the clinical research space. So you have the European Union, you have the APAC region, you have LatAm as well. And all these regions, from an India-specific perspective, the way we look at it is a growth of close to around 16% CAGR. And I think it's around -- if I have to concentrate only on India, that is. But if you look at the overall APAC region, the size of the market tends to grow a little long. And the reason why I had mentioned earlier in my slide as well, the factors why we feel India is one of the most attractive destinations today for clinical research is predominantly the patient pool. There is a growing incidence of diseases across various therapeutic areas, not limited only to metabolic, but unfortunately, in oncology as well, cardiometabolic, infectious diseases. These are therapeutic areas where the incidence of diseases in India is growing at a very rapid pace. So that enables easier recruitment. The time lines as well when it comes to regulatory time lines, what was prevalent in India maybe 2 decades earlier has now changed. So the component of doing ease of business and carrying out trials in India has improved vastly. We have tried to put together a comparison of what constitutes either business in terms of doing trials in North America, doing trials in Australia and doing trials in India. So patient pool and study time lines, the facilities and the infrastructure, which has come up in India in the last 2 decades. The hospital infrastructure, the availability of trained manpower, availability of GCP-trained investigators. These are factors which are contributing to the growth of clinical research in India. I've already spoken about the regulatory environment a little bit, although there is still work to do compared to the ease of approvals and the speed of approvals in North America and especially in Australia. I think they have taken a lead globally in terms of regulatory approval time lines. But India is not too far away. We are -- there have been a lot of changes in the Indian regulatory framework. The new NDCT rules, which were released by the government of India, are set to undergo further revisions. There is a lot of emphasis now on bringing up standards of approvals on par with what the global regulators are expecting. And the quality of data. Like I said, while the infrastructure has grown, the manpower has grown, the issue of data integrity, which was a bottleneck 2 decades back is no longer the case. Now we have AI-enabled automated systems, data collection is completely automated. We have quality frameworks in place. And if you see most of the approvals, we have not seen any major data integrity issues which have created a bottleneck for drug approvals. The incidence of trials being approved by the U.S. FDA, the EMA and MHRA and all the major global regulatory bodies has been increasing year-on-year. So in a nutshell, I would put these 4 or 5 factors as one of the leading indicators for the growth of clinical research in India. And there is an obvious cost arbitrage, which I guess is very evident when compared to carrying out the trial in North America and Australia. India does have that distinct advantage. But in today's global framework and in the regulatory scenario, I guess I would put that as one of the last reasons for the growth of the clinical research industry in India. We are trying to show you a snapshot of how clinical research is carried out by global CROs. These are clinical CROs which are well known across the globe, IQVIA, ICON, Thermo Fisher, Syneos to name a few. These organizations have been in this space for close to 2 or 3 decades. And that's the reason why we have come to a breadth of services, which is unparalleled for sure. But if I have to look at the Indian scenario and be very specific with who the players are in the Indian clinical research space, we have outlined a few names like Veeda, Cliantha, Lambda, Vimta and Syngene is now a very major player in this space, in terms of volume, in terms of the number of trials, in terms of regulatory approvals and in terms of experience as well. So one of the key success factors, what I -- what we feel is leading to this growth in terms of Indian players becoming a dominant force in carrying out clinical trials is the understanding of the local market and regulations, the full-service, end-to-end service operates. The way Syngene plays into this entire dynamic are some distinctive factors which we are bringing into play, which I will speak about in the coming slides. But I guess one of the predominant factors, what most of the global pharma look for before carrying out large global Phase II or Phase III trials is the ability of that particular CRO to offer end-to-end service offerings. It's always happened that large Phase II, Phase III trials are fragmented across 2 or 3 different players specializing either in the trial execution or from a data management perspective or from a statistical perspective. But today, the need of the hour for most of this global company, especially looking at the pressure on their pipeline and the need for speed is to look at a one-stop shop which offers all the length and breadth of services that constitutes a global clinical trial. And not just limited to patients. We are now moving a step forward and moving into the preclinical space as well, which I will talk about in my coming slides. The other factors which are leading to India being an attractive destination is the access to the large patient population. And I've already mentioned this, there is a distinct leverage that we play with in terms of time lines and in terms of global compliance. But in addition to all this, I guess, one of the most attractive areas which global companies are looking for is the kind of investments which are going into the newer modalities. And when I say newer modalities, it's in terms of biologics, the ADCs, which require a lot more of translational insights rather than the traditional clinical development. This also includes -- these insights also includes the multiomics data, the biomarkers and the advanced bioanalytical platform. All of which Syngene today is now trying to bring together under one roof. And that's where I strongly believe Syngene has a distinct advantage compared to the competitors that we have in the Indian clinical CRO space. Just to explain a little bit more on how translational plays a very integral part in the overall drug discovery. I guess all of us are aware, the lead times for identifying a molecule and taking it right from discovery, all the way to commercialization. And within discovery starts right from target identification that we move to lead generation, target validation and optimization, and finally, the lead selection. One of the largest component involved once we get through the discovery space, one of the largest component comes under the development space, which will include the preclinical studies. And these are phased out into Phase I, Phase II and Phase III. This is where the translational component comes into play. When we -- when the need is to actually look at data in a very seamless manner rather than a fragmented one, which used to be the case at least until the last couple of years. Translational research today breaks the barrier, breaks the silo between the data generated out of discovery and with data generated out of the preclinical space. This is the need of the hour today for most of our global pharma companies, not limited again to innovator or to biotech, but across the global pharma landscape. The need to connect data from the lab and go directly into the clinic is what most of these companies are looking for, and this is what we at Syngene are now trying to bring it. This data is all the more critical because from a traditional perspective, the average lead time, which I guess most of us are aware, from taking a drug from the discovery space all the way into commercialization, average is around 12 to 15 years. And the numbers being quoted the costs especially for bringing a drug from discovery, keeping in perspective that almost 60% or 70% of the targets invariably fail either in the discovery stage itself or in the early development phase or the preclinical phase, still constitutes to close to $2.5 billion for an actual drug to come into the commercialization stage. The way translational plays into the whole thing is to reduce these traditional pathways that have been established and try to bring in the drug into the clinic much earlier with better informed decision-making, a better data analysis and a better patient stratification. There are various other components which goes into translational research, some of which are the use of biomarkers, which again is the integral part of translational research. There are various models coming up, newer models, especially with the regulatory now being focused on newer and alternative methodologies compared to the traditional animal studies. So these include analysis from organoids, when there is organ on chip and other newer methodologies, which also use the help of AI. And AI -- we foresee AI playing a very, very critical aspect in the way the trials are designed and the way the analysis is done and the way we go into the genome sequencing as well. So this, in a nutshell, constitutes what translational research is all about, and I'll speak about it a little bit more in the coming slides. This gives you a snapshot of how our clinical development happens, right from basic research to preclinical discovery, and where translational development plays a very major and critical role before the drug is taken into the humans. It basically is the foundation for the entire planning that goes across. And when I say planning, this starts at least a decade or 12 years prior to having a successful molecule identified, validated and optimized to go into the preclinical space. So it needs a lot of planning, resources and also for execution. So there are 4 basic pillars on which translational sciences is comprised of and this is what we are trying to establish at Syngene, and we have successfully done that by establishing relationships with most of the rate of the major biobanks in India. Biobanking contributes to all the tissue and biomarker development that is required and the organoid and the organ on chip methodologies that I've spoken about a little while. The clinical biomarkers in itself is a pillar on which most of the data generated is very useful for the global pharma, especially the innovator pharma and the biotech pharma. I've spoken a little bit about organoids. I've already elaborated a little bit on how AI is poised to play a very, very key -- very, very critical role in terms of precision medicine. To speak a little bit about what constitutes the clinical trial in a whole starts right from protocol development. And these are services, if you remember, I've spoken about end-to-end service offerings, which most of these pharma companies are looking for today. And at Syngene, our clinical trials unit comprises of various subspecialties, which are brought together under one roof. So we have a medical writing team who are responsible for development of the protocols. It is an integrated framework within one unit where all players come into play to take a trial right from the time of protocol development into execution monitoring, there is a logistics involved in terms of clinical supplies management. The clinical lab services, which constitutes all the safety testing for all the patients enrolled into the trials. Then comes the component of biometrics and clinical data management. And speaking of large trials, when we talk in terms of volumes or in terms of number of patients, we are looking at an average Phase II or a Phase III trial comprising anywhere in the range of 300 to 600 patients. Then you have larger Phase IIIs, which go into thousands of patients being enrolled across the globe, multi-geographic, multi-ethnic and multi-diverse populations, which require a humongous amount of data management to be done. And that's what this team actually carries out. And in the end is your clinical study report writing. At the end of the trial, we put together a clinical study report. So in a nutshell, these are the end-to-end offerings that comprise executing a successful clinical trial. Today, Syngene has all these services under one roof in our clinical trial group. So what does T&CR business include? Other than clinical trials, just to give you an overview on how we are trying to position ourselves as an end-to-end clinical research service offering, is the human pharmacology unit. We have close to 190 beds under one roof spread across 4 different clinics, with ICUs which enable us to carry out healthy volunteer studies. And when I say healthy volunteers, these are not limited only to bioequivalence, but also include your single-ascending dose, the multiple-ascending dose studies, the drug-drug interaction, the food effect studies, basically across all the therapeutic area. While it is predominantly leaning towards generics, there is also an increasing need today and as per the mandate of the regulatory as well, there is an increasing need for these healthy volunteer studies, for the biosimilar molecules coming out and for vaccines. We then have a clinical trial service unit which caters predominantly to patient-based trials. I've spoken about it in the previous slide on how we offer end-to-end services in terms of clinical trials. We have a network of close to 180 hospitals spread across the length and breadth of India. We have access to more than 200-plus qualified investigators across major therapeutic areas. We are right now specializing more in oncology, but also have investigators who are key opinion leaders in metabolic diseases, infectious diseases, immunology, immuno-oncology and rheumatology. We also have a specialized bioanalytical service, and this service is differentiated between small and large molecules, which are very critical to support the safety and the efficacy endpoint for all these trials. In the large molecule space, we also developed immunoassays to determine the PK, PD and the immunogenicity for all these global Phase II and Phase III trials, including the biomarkers. We have a central lab service, which is predominantly involved in safety testing. And this caters to both our early phase as well as our late-phase clinical trial offerings. When I say early phases, it is toward healthy volunteers; and late phase is more towards patient-based clinical trial. Under this service, we carry out biomarker analysis, global sample logistics and kit building for distribution across sites in the length of breadth of India, and also a multi-geographic reach with the help of all the alliance partners that we have developed across North America, Europe, Australia, Jordan and New Zealand. Associated with this are the allied services, which I had outlined earlier as well in terms of clinical data management, biostats, medical writing and regulatory affairs. So some of the strengths which I would like to outline for Syngene is the track record and the expertise. We have today completed more than 800 bioequivalence studies, predominantly for the U.S. and European markets, but also including LatAm and Asia and rest of the world. The integrated continuum. I've already spoken about how translational research is going to be the key driver in -- which is a huge, huge amount of interest in terms of today's innovator pharma and biotech. So this integrates right from early discovery and DMPK to the toxicology biomarkers and clinical development right into the patient-based trials. The global clinical network that we have developed across U.S., U.K., Jordan, Europe, Australia, Sri Lanka and New Zealand. This enables us to cater to global large Phase II or Phase III trials requiring patients from across geographies, requiring diverse population subsets and requiring local regulatory specific requirements. So we have a pretty diversified platform, but which is stitched together end to end, and we are now incorporating a lot of AI as well, AI and ML into most of these services, especially into our bioanalytical and clinical trial offering, which we believe is the strength that Syngene brings to the table. And the differentiator which Syngene brings to the table compared to all our other Indian clinical CROs in play. Last but not belief is the state-of-the-art infrastructure and the fact that we have been in the business for close to a decade or more now. And most of these studies, which I mentioned earlier, has been regularly inspected by all the major global regulatory bodies across the world, predominantly by the FDA and EMA, which have been the reason of interest. Most of the studies we have carried out has been submitted to the U.S. FDA and the European regions. And the fact that all our labs are now globally accredited by all the major league. If I have to talk about Syngene in a very holistic perspective. We are one of the largest CRDMOs in India, both in terms of manpower, in terms of revenues and more importantly, in terms of the services being offered. We have a very broad platform of discovery services, which includes medicinal chemistry, synthetic chemistry. We have dedicated R&D centers. Most of the information is available on public domain. We have the largest dedicated center for 1 of the top 5 global pharma today. And the large molecule CDMO and small molecule CDMO, which are again pretty expansive in size in terms of CGMP compliance facilities, in terms of process development, CGMP compliant facilities and the manufacturing facilities that we have spread across India. While we are headquartered in Bangalore, our facilities spread across Bangalore, Mangalore, Hyderabad and our most recent international acquisitions in the U.S. in Baltimore. This was -- this is limited to the large molecule space. And in between all this comes the translational clinical research service offering which I had elaborated prior. Speaking a little bit about our operating model. There are 2 basic fundamental models that we work with in terms of clinical research, which is a 2-way and 3-way model, where Syngene is in direct contact with the client. It's called the 2-way model, and we offer all the end-to-end clinical trial solutions. The revenue is milestone-based, typically spread across 12 to 24 months. And there is also a 3-way model, which enables clients to -- where Syngene acts as the primary CRO, but enables our clients to utilize our services to have large global Phase II or Phase III trials to be executed, and we do that with the help of our partners in geographies like U.S., Europe. I've already spoken about Sri Lanka, New Zealand and Australia. And it's a shared responsibility between Syngene and our preferred partner. And the revenue is again milestone-based with contracts spanning longer time frame, not your typical 12 to 24, might extend to 36 to 48 months as well, depending on how the trial is designed and how -- and what the size of the trial is in terms of patient populations to be recruited. Why it is a strategic focus for us? The reason being our endeavor to support more complex and newer modalities as is evident in the growing pipeline and the R&D pipeline of most of the innovator pharma. I guess there is a pressing need today to bring in difficult-to-make products, more complex products. So strengthening this unit and spreading our services across geographies becomes even more critical. So the 3-years formula of strengthening, stabilizing and streamlining our existing functions. The forward integrated integration into the subsequent phases is again an endeavor which we are looking at into the mid and long term as a vision for the translational clinical research business for Syngene. And of course, like I earlier mentioned, I guess, the integration that is required, which is in play already in terms of expansion into the bioanalytical space, developing and integrating more of the translational sciences across Syngene into the clinical research space and the clinical development, which drives faster decisions and reduces the risk. So end-to-end, our overall endeavor is to become a comprehensive clinical partner for all our clients, right from early discovery, all the way into development. So in a summary, I've outlined how translational and clinical research supports decisions across life cycles, and how clinical trials today forms a pretty large and growing segment in the overall global CRDMO, and APAC, being one of the fastest growing, the emphasis is to develop India much faster. And evidence -- it is pretty evident in terms of the number of trials being conducted in India, the number of patient populations being recruited into global Phase II, Phase III trials, which are going in for regulatory approvals. India is poised to be a major market. And the differentiation that Syngene brings into play, with all the experience that we have in any case, having this integrated platform between discovery and development and the teams with the experience and the bandwidth to carry out global clinical trials. I'd be happy to take any questions.

[Operator Instructions] We'll take the first question from the line of Kunal Dhamesha from Macquarie.

I have a couple of questions, one more of a clarity. On the project that we have received or we have disclosed on the clinical trial, is it fair to say that would be a 3-way business model?

Largely a 2-way business model. But yes, we are working with one of our partners in the U.S. because there is a smaller component of patients which need to be recruited within the U.S. region as well. So it's a sample size of close to around 700 patients, out of which 20% of the population will be ready to [indiscernible]. So it's a combination of both 2-way and the 3-way model that would play.

Okay. Perfect. And let's say, more on the team size, we have been -- you just said that we have strengthened this part of the business, right? So if I have to kind of understand what's the team size now versus what it used to be a couple of years back, it would be great.

From a clinical trial perspective, it was a much smaller unit. Maybe a couple of years back, it was close to around 35 to 40 employees. We're engaging with clients for offering the service. But today, we have grown it to almost close to 200-plus employees overall.

Sure. And it's interesting that you will not talk about biomarkers and multiomics data. My understanding is basically, which is very limited, but the understanding is that some of the countries are not very open to sharing this kind of multiomics data regarding the population, and that's what is causing some bit of, I would say, restrictions. So how do we kind of protect that data, and then kind of make sure that, at least from a regulatory perspective, Syngene or India doesn't get kind of flagged on these aspects?

Good question. I guess that's the talking point in this space, I would rather say, across globally. And this is a question that is frequently encountered today in most of the major conferences related to genomics. But the Indian regulatory system has provided enough guardrails in terms of use of genomics data. There is an Indian genome project itself, which is being taken out by the Indian government, I'm sure you're aware of it, and there is an Indian genome project as well, which is now in play by the Indian government. So I would say there are enough guardrails. It is ring-fenced appropriately. So there is actually no danger perceived in terms of Indian population data being utilized or exposed to other global players. So I guess, in a nutshell, it is a complex space to operate in, but there have been enough guardrails put in by the Indian regulatory.

Sure. And lastly, if I may. One, I think there is a theme right now that previously whatever was thought that some of the targets which cannot be attacked or basically some of the pathways, which are not used and now incrementally with newer modalities, be it oligos or ADCs, a lot of these undruggable targets are becoming -- so would a lot of this translation research be doing this kind of activity to find out? Or this would be more -- what I suggest is more of a discovery part of the development?

No. I guess this is where translational actually comes into play. Like you rightly said, the number of targets that we're failing before the actual optimization of the drug had to be carried out, is now being looked into with a much more detailed analysis to these translating sites. So the insights which this data can provide today gives an alternative for companies to look at models like repurposing the drug into a different indication or looking at a different indication altogether than what it was originally intended to be. It gives you that flexibility of looking at various modalities. And the chances of success is much higher and the chances of bringing the drug into the human space is much, much faster.

[Operator Instructions] We have a question from the line of Madhav from Fidelity.

My question was, did I hear right, you said that the project which we have, which we won recently entails 700 patients, of which 20% will be from the U.S. Is that the right understanding? Or you were just quoting an example for us to understand better?

I didn't want to be exactly specific, Madhav, because the protocol while it has been approved by the U.S. FDA, the protocol is now being evaluated by the Indian regulatory. So we anticipate there might just be a small modification in terms of the sample size. Having said that, I'm pretty sure that the sample size will average anywhere between 600 to 700 patients. It will then depend on how we want to go ahead with the patient stratification. So there might be a component where only 10% of the patients might be required to be recruited in the U.S. or it might be 20%. So that number is a little dynamic. But overall sample -- yes, the overall sample size would still be anywhere between 600 to 700 patients, and the need for dual recruitment also is a must. The percentage still needs to be determined on what quantum of patients need to be recruited in India vis-a-vis the quantum of patients in the U.S. But both the geographies would need to recruit, since it's a U.S. FDA mandated requirements when they had given their approval to move ahead with this trial.

Got it. And typically, how long do these trials take? Is it like a 1-year, 2-year, 3-year process over which this will be conducted like the entire sort of end-to-end process?

Typically, Madhav, Phase IIs tend to average anywhere between 24 months to 36 months, especially when the sample size in the numbers of multiples of hundreds. The moment you cross 400, 500 patients, it typically averages around 24 to 36 months. But in this case, it is a little more of a challenging trial with a challenging design. So we are anticipating anywhere close to 36 months from the time of recruitment until trial completion.

Got it. And anything you can share on the therapy area that we're looking to target with this drug? Like is it an oncology drug or is it like a metabolic drug? Any color you can share there will be helpful.

Absolutely. It's more of a musculoskeletal kind of an indication. The actual indication is lumbosacral pain. And this molecule stands out in terms of its characteristics in reducing the pain index for patients suffering with back pain. It's one of the novel molecules, which is going to come, which has not been approved anywhere else in the world. And it has a challenging design and a very, very exciting trial. So we are proud to be part of it.

Okay. And the client, like you mentioned earlier, is a biotech company, right?

Yes. It's U.S.-based biotech.

U.S. biotech. Got it. Okay.

We'll take our next question from the line of Kunal Dhamesha from Macquarie.

So one thing is clear that this translational research kind of increases the probability of molecule going from discovery to commercial. How does it help with the time line in terms of shrinking the time line of the development?

So typically, what happens, Kunal, in the preclinical phase, what I was trying to outline in one of my first slides is the average time taken to get through the entire gamut of studies required. And this will require studies to be carried out in multiple species, starting from, for example, mice, then to rodents, then to primates and ultimately, into humans. So the typical traditional time line that we have observed over the last couple of decades in the pharma industry is anywhere between 5 to 7 years by the time the preclinical phase is completed. With the introduction of translational sciences, it has been proved that we can cut down this time line from the traditional 5- to 7-year time frame, to much under 5 years, anywhere between 3 to 4 years as well, provided the molecule exhibits the linearity and the characteristics and the data which comes out. So you have a higher chance of reducing your time line in the preclinical space from the traditional 7 years down to 5 years and below. Thus aiding the movement of the molecule from the preclinical into the clinics.

Sure. And this Phase III trial that we are doing, is it a biologic molecule or is it a small molecule?

It is a small molecule.

We'll take our next question from the line of Surya Narayan Patra from PhillipCapital.

Sir, my first question is on the kind of revenue booking style. So see if whether it would be proportionate to the patient recruitment or market of recruitment where that is -- or the site of recruitment, so how should the revenue would be booked, whether it would be a milestone-based or it will be very linear throughout the year. How should one think this business model for modeling and factoring into the financials?

Surya, it is traditionally milestone-based. And I guess, predominantly, globally, what we have seen across trials being conducted in any part of the world, it's generally milestone-based. But coming to your -- to address your first question, the pricing depends on the geography where the trial is conducted, the number of patients that are recruited. There are some indicators that we build up in the proposal. So the number of patients, the number of sites, the geography where the trial is being conducted. Plus you have additional factors like the amount of data management that is required, the logistics supplies that come into play, the reference products, which need to be structured come into play. So these are the various factors which come in to determine the overall cost of a trial. But traditionally, it has always been milestone based. So it generally is not linear. It is depending on different milestones achieved during the course of the trial.

Okay. And so the first milestone payment, wherever that we will receive for the first contract, it will be subject to the recruitment process completion or what else?

No. It again is divided into a pre-study and in-phase states and the post-study phase, broadly under 3 categories. So when we say pre study, it involves finalization of the protocol design, of the protocol per se, and submission to the regulatory bodies. This generally constitutes the first milestone. And then the subsequent milestones can further be drilled down into regulatory approval stage, then the first patient in when we start the trial or maybe the first site being activated. It depends. There is no thumb rule or there is no hard and fast template that is followed by all the companies or all the CROs. It depends on each one's convenience and the sponsor's cash flows as well. So we try to get a best case. But broadly, globally across all the global CROs and Indian CROs, it is categorized into 3 broad areas: the prestudy, the in-phase study phase and then the post-study phase.

Okay. Sir, just one more point relating to the business model here. See, what are the areas of investment for Syngene here? I mean what kind of resources that we would like to create? It is people -- investment on people or what else capability that we need to develop? That is one. And what bargain power that we do get while negotiating for any contract?

So investments would be very broad. I mean in terms of manpower, in terms of maybe a few investments into technology platforms, we have most of them per se, to drive proper trial. But some trials might require specific platforms to be used. So I would rather put it as a very broad-based investment that we are looking at to strengthen the capabilities that are already existing. So nothing very specific that is required for this.

Sure. Just last one point from my side, sir. See, with the kind of capability that we have already created, so is it there anything like that we can take a certain number of a project or a certain quantum of project or something like that? Or we -- there is a kind of enough scope to embrace number of contracts at this level?

Madhav (sic) [ Surya ] I'm sorry. If you can please repeat your question?

I'm asking, so given the kind of capability what we have already created, so how many number of a project that we can cater to or how many contracts that we can sign for? So is there anything -- is there any capacity or capability restriction that we are currently having?

No. In terms of clinical trials, we do not have a capacity limitation model. Like I said, it just -- it's more in terms of increasing your resource capabilities in terms of manpower. So there's no defined limit of projects or there's no limitation to the number of projects that we can take. And that holds true for our early phase service offerings as well. We have a pretty large infrastructure, like I mentioned in one of my first slides, of close to 190 clinical beds. So that gives us the flexibility to carry out multiple projects, either sequentially or in parallel. And clinical trials per se, global Phase II and Phase III, do not require any specific infrastructure to be built up because these trials are carried out across hospital sites and the network that we have developed across India and in various other countries. So infrastructure is definitely not a limiting factor in terms of the number of projects that we can take.

Okay. If that is so, sir, were there any breakeven time period that is there or from the first year, we are going to add something incrementally at the earnings level?

Like I said, there's no defined time frame. We are already positive in terms of cash flows and in terms of profitability. So the question of breaking even doesn't arise with us.

We'll take our next question from the line of Shyam Srinivasan from Goldman Sachs.

Thank you for the very informational session.

Shyam, can you use your handset more, please? Your audio is not very clear.

Yes. Can you hear me now? Is it better?

Yes, please go ahead.

Yes. So I'm saying, I'm not asking a very Syngene-specific or a financial question, but more from a unit economics. How should we look at, say, if we do one clinical trial work, how should we try to make, let's assume a bottom-up approach of how much does the project entail in terms of investments? You mentioned about cash flows as well, but I just want to understand how do these cash flows -- but I'm just trying to make a simple DCF model of one project. And what are the typical economics that one can derive either in terms of the payback or in terms of profitability or return metric? I'm not looking at from a Syngene perspective, more from individual project economics.

It all depends on the size and the type of trial being carried out. So invariably, even if I look at it from a bottoms up approach, there is an amount of profitability, which is already factored in. So generally, these trials, we do not take trials which do not have a profit margin built in. So we tend to see that depending -- like I said, it depends on the -- the percentage of profitability, again, will depend on the size of the trial and maybe the therapeutic area that we're dealing with. If you're looking at a smaller trial, obviously, it correlates to lesser overall margin, profit margin, but larger global Phase II and Phase III trials do have a significant percentage of profitability built in.

But -- and some quantification will help. Is it is 25% EBITDA margin? Is there -- I'm just trying to see how to circulate it? Are we doing everything which is -- and I'm trying to compare to, say, Syngene's overall profitability, which is today between 25% and 30%. So just want to understand, in a small project, is it like 20% margins and large projects is 35%, I'm just trying to get some quantitative numbers here.

Sure. I guess I will not be able to get you the exact specifics, but I can hazard a guess that we average anywhere close to -- anywhere in between 20% to 30% in terms of profit for our trials.

Got it. Sir, and the last question is on the people required for running this business. So is there -- from a talent acquisition perspective and from a scale perspective, are we still in the process of hiring people for running this entire segment? Or where are we in that journey?

Good question, Shyam. At the moment, I guess, the size that we have is adequate to the trials that we are conducting and even for this large global trial that we have at the moment. But like I said, since it's a longer duration trial and it involves 2 different geographies, we have plans to have expansions and manpower as and when required. We have the talented -- we have the talent skill sets already existing, but we would not hesitate to increase that if the trial demands over a period of time.

Thank you. Ladies and gentlemen, that was the last question for today. For any further queries, you may contact the Syngene team. On behalf of Syngene International, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.