- Syngene International drifted from its core CDMO business, says Kiran Mazumdar-Shaw
- Leadership changes aim to refocus Syngene on biomanufacturing and contract development
- Previous management pursued undifferentiated, commodity services outside core strengths
Biocon founder Kiran Mazumdar-Shaw said Syngene International, the group's contract research and manufacturing arm, had drifted away from its core business but is now on course for a turnaround, in an exclusive interview to NDTV Profit. The stock is down 7% in one month, 33% in six and 35% year-to-date.
"Syngene lost its way by not doubling down on CDMO," Mazumdar-Shaw said, adding that the company has since recognised contract development and manufacturing as "a very low hanging fruit for Syngene." She said a leadership change, with an "old timer" who knows the business well now at the helm, would help refocus the unit on biomanufacturing and CDMO, calling it "our forte" and "Biocon's forte."
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Mazumdar-Shaw said Syngene had strayed into unnecessary and undifferentiated services under previous management. "We were staffed with people who were trying to offer services which were not really required," she said. "I have always believed in offering differentiated services and they had lost track of that. They started getting into commodity services which according to me is not where we should be."
She said the company had made significant management changes to correct course and expects the results to show up on the timeline she has set. "You will not only start seeing green shoots but you will see a strong turnaround next fiscal," she said, adding that the current fiscal would mark the first signs of recovery.
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Free Cash Flow To Start Showing Up
Mazumdar-Shaw linked the turnaround narrative to the wider group's improving financial position, pointing out that Biocon's capex-heavy phase is now behind it. She said the company had already begun retiring debt and cutting finance costs after raising close to a billion dollars through two qualified institutional placements, which removed the overhang of heavy interest provisioning and repayment obligations.
"That actually now makes for a very profitable business, a growing EBITDA, and obviously free cash flow is going to start showing up from this fiscal," she said, adding that debt reduction was already underway rather than something the company was waiting on.
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