Exclusive: Will The Street Buy Indegene’s Promise?

Indegene is bracing up for its maiden listing at the Indian exchanges, the company has an intriguing story to tell of its inception with growing financials in the present day and high hopes for its future growth

In August this year, Indegene, life sciences commercialisation firm received the nod from the Securities Exchange Board of India (SEBI) to go forward with its listing plans on the Indian stock exchanges. 

The company provides digital services to biopharmaceutical, biotech and medical device firms in the global market. Indegene is floating an initial public offering (IPO) subsuming a primary issue of Rs 950 crore by the promoters and an offer for sale (OFS) of 3.63 crore equity shares by its existing shareholders. In August this year, Indegene received the nod from Securities Exchange Board of India (SEBI) to go forward with its listing plans.

The whole deal is estimated to bring in around Rs 3,200 crore for the company which it wishes to utilise in paying debt, servicing working capital and pursuing inorganic growth. The selling shareholders looking at a prime exit include Carlyle, Brighton Park Capital and the Nadathur Family Office while the promoters Manish Gupta, Dr Rajesh Bhaskaran Nair, and Anita Nair are selling minimal equity in the fresh issue.

Indegene aims to be an end-to-end service provider to life sciences companies delineates Manish Gupta, Co-Founder and MD in an exclusive interaction with BW Businessworld. He says that Indgene presently supports these companies in regulatory affairs, medical affairs, marketing and selling services and pharmacovigilance services with a digital-first approach.

The MD denied commenting on a timeline for the listing for now but said, “The rational for doing the IPO now is that we want to build an institution that outlasts all of us and the right way to do that is by going public apart from fresh access to capital, liquidity to existing investor and a currency for any future acquisition.”

The Interesting Indegene Story

Founded in 1998 by Gupta and four other partners, Indegene has come a long way charting through troubled waters and overcoming many shockwaves that came along its way. He shares that the company began by providing technological solutions and credible content to Indian physicians but soon realised that its ambitions and the company's balance sheet would be far healthier in the global market.

On the back of the dot com bubble and 09/11 the funding scenario dried up all over the world Gupta says the company ran out of funds and was faced with a reality of either shutting shop or pivoting towards a model that will not only generate profits and revenues but healthy cash flows. Indegene then began servicing pharmaceutical clients in India offering them different ways to reach out to the market by leveraging its credibility with physicians.

“Although we started generating some revenues during this time with mere profitability - we were working on low margins and were facing huge cash flow pressures. As founders, we did not take salaries for two years to preserve cash and soon realised that this too was unsustainable,” Gupta eloborates.

The answer to this was operating in global markets says Gupta, with the US being 50 per cent of the global pharmaceutical market seeming as an obvious choice as well as other European markets.

In 2004 the company began searching for funds and struck stars with NS Raghavan, Co-founder of Infosys who had hung his shoes in the IT firm in 2000. Raghavan invested in the company seeing the promise following which Indegene began operating in the US among other markets. “We have moved along with a simple advice of fixing profitability first and not depending on raising capital,” Gupta enumerates.

In the present day, the company employs around 5,245 people across nine countries with 66 per cent of its revenues coming from North America, 27 per cent from Europe and 7 per cent from rest of the world.

According to the financials disclosed in the draft red herring prospectus (DHRP), Indegene’s revenue grew by 72 per cent to Rs 1,665 in financial year 2022 (FY22) against Rs 966 crores in FY21. The company’s profit after tax (PAT) rose by 9.3 per cent to Rs 163 crores in FY22 versus 149 crores in FY21.

The Opportunity Ahead

Indegene is banking high on the spending by global pharma firms on their operational expenditure. The company says globally total operational expenditure by pharma firms is expected to reach USD 187 billion out of which USD 53 billion will be sales and marketing that fills a major part of Indegene’s revenue basket.

“We have not even scratched the surface in terms of grabbing the market opportunity present in Western countries. A significant amount of the USD 187 billion operational spend will be present in these markets and presently we are only a tiny piece of this huge pie,” Gupta concurs. He adds that the company still has a lot of ground to cover in terms of customers and customer segments.


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