40% EBITDA margins, 25% ROCE, 14 commercialised molecules with blockbuster end-markets, and fermentation-based peptide capabilities that few peers globally can match
The Indian contract research and development manufacturing organisation space has attracted enormous investor attention over the last several years — and for good reason. India’s combination of scientific talent, cost-competitive manufacturing and a growing track record of regulatory compliance makes it the natural destination for global pharmaceutical companies looking to outsource complex chemistry and biologics work.
Within this crowded field, Anthem Biosciences stands apart on two metrics that matter most: EBITDA margins of approximately 40% — the highest in Indian CDMO — and ROCE of 25% — again the highest among peers. Jefferies initiates coverage with a BUY rating and a target price of Rs 1,050, implying 18% upside from the current market price of Rs 890.65.
The Founders
The management story at Anthem is unusual and worth leading with. The company was founded in 2006 by three technical founders — Ajay Bhardwaj, Ganesh Sambasivam and KC Ravindra — all of whom hold backgrounds in chemical engineering or PhD chemistry and accumulated 10-25 years of industry experience before founding Anthem. Twenty years after founding, the same team continues to run the company’s day-to-day operations, heading key divisions including strategy, marketing and R&D.
This matters for a CDMO business more than in most industries. CDMO relationships are built on trust, technical credibility and years of demonstrated execution — the kind of institutional knowledge that walks out the door when founders exit. “Anthem’s day-to-day ops are still run by founding team members who head key divisions, providing strong stability at CXO level,” Jefferies notes — a continuity that provides clients confidence in the long-duration relationships that large commercial molecule contracts require.
What Sets Anthem Apart
Anthem’s competitive positioning rests on a specific and rare manufacturing capability set. The company has invested ahead of the curve in complex technologies — fermentation, peptides and oligonucleotides — areas where the technical barriers to entry are highest and where global pharmaceutical companies are most dependent on a small number of qualified, trusted manufacturers.
The peptide capability is particularly relevant given the explosive growth of GLP-1 drugs — the class driving the obesity and diabetes treatment revolution globally. “Anthem is one of the few players with complex fermentation-based peptide capabilities,” Jefferies notes. The combination of manufacturing strength with research services allows Anthem to capture clients early in the drug development lifecycle — at the discovery stage — enabling seamless scale-up from discovery through clinical development to commercialisation. This integrated model creates deep, long-duration client relationships that are far stickier than pure-play manufacturing contracts.
Fourteen Commercialised Molecules
The revenue visibility at Anthem is anchored by its portfolio of 14 commercialised molecules — four of which were added recently in FY26. The scale of the end-markets served by these molecules is what gives Jefferies confidence in the growth trajectory. “At least 50% of these 14 molecules are blockbuster drugs with end-market sales of USD 1 billion or more by CY30, with five of them exceeding USD 2 billion,” the report states and it ties Anthem’s manufacturing revenue directly to the fastest-growing drug franchises in global pharma.
Commercial molecules accounted for 61% of total sales in FY26 and the end-markets are growing at 17% constant currency CAGR over 2025-30 — providing what Jefferies describes as “strong growth comfort for the next four to five years.” This is revenue is tied to already-commercialised, already-growing drugs whose manufacturers need more of what Anthem produces.
The Financial Profile Metric
Anthem’s financial profile is genuinely exceptional within the Indian CDMO peer group. EBITDA margins of approximately 39% in FY26 are the highest in the sector. ROCE of 25% is similarly sector-leading. Revenue has grown at 21% CAGR over FY16-26 — a decade of consistent above-industry growth. And the balance sheet is net cash — meaning the high returns are being generated without financial leverage.
Jefferies expects sustained momentum. Revenue, EBITDA and EPS CAGRs of 18%, 21% and 20% respectively over FY26-29 are the forward projections — driven by commercial molecule scale-up and a robust late-stage pipeline of projects approaching commercialisation. The near-term trigger that Jefferies highlights most prominently is the commercialisation of a biosimilar for a Big Pharma customer — a project that would add a large molecule dimension to what is predominantly a small molecule commercial portfolio.
The CDMO Mix Is Improving
The revenue composition shift underway adds another layer to the margin story. CDMO manufacturing — the highest-margin component — is expected to grow from 75% of revenue in FY26 to 78% by FY29, while the lower-margin CRO component remains stable at approximately 7-8%. Specialty ingredients — another lower-margin segment — hold steady at approximately 15%. As CDMO’s share grows, the blended margin profile improves incrementally — supporting the 21% EBITDA CAGR Jefferies has modelled even without a step-change in individual project margins.
The Risks
The top two projects contributed over 30% of FY26 sales — a meaningful revenue concentration that creates vulnerability if either project faces regulatory delay, manufacturing issue or competitive disruption. The Davos partnership — which functions as Anthem’s strategic and commercial partner in the US — accounts for approximately 15% of FY26 sales, creating a channel concentration risk alongside the project concentration. Neither of these risks is unusual for a CDMO at Anthem’s stage of development, but they are worth tracking quarter by quarter.
Scorecard
| Metric | Value |
|---|---|
| Current Market Price | Rs 890.65 |
| Target Price | Rs 1,050 |
| Upside | 18% |
| Rating | BUY (Initiation) |
| Valuation | 65x Sep-28E EPS |
| FY26 EBITDA Margin | ~39% (highest in Indian CDMO) |
| FY26 ROCE | ~25% (highest in Indian CDMO) |
| Revenue CAGR FY16-26 | 21% |
| Revenue CAGR FY26-29E | 18% |
| EBITDA CAGR FY26-29E | 21% |
| EPS CAGR FY26-29E | 20% |
| Commercialised Molecules | 14 (including 4 added in FY26) |
| Blockbuster Molecules (USD 1bn+) | At least 7 of 14 |
| Commercial Revenue Share | 61% of FY26 sales |
The 65x September 2028 EPS target multiple — versus the industry at approximately 60x one-year forward — reflects the premium Jefferies ascribes to Anthem’s differentiated capabilities and higher ROCE. “We assign a higher multiple due to differentiated capabilities and higher ROCE,” the report states.