It’s like the tide coming in. The feeling of return must be washing over Ajay Bhardwaj.

As co-founder of Anthem Biosciences, which is offering Rs 3,395 crore worth of shares for sale as it lists on the bourses today, Bhardwaj is scripting a story that he walked out of in 2006 when he left biopharmaceutical major Biocon. But it’s a bolder story, if not a bigger one.

A prominent contract research, development, and manufacturing organisation (CRDMO) based in Bengaluru, Anthem’s implied price to earnings ratioThe PE ratio is a widely used valuation metric that compares a stock’s price to the company’s annual earnings per share. The higher the ratio, the more expensive the stock. It essentially reveals how much an investor is paying for a share to buy its earnings (P/E) of about 70X places it at a premium to Syngene International, a Biocon group company with a P/E of 55X. But it is below Sai Life Sciences (94X) that listed in December and Cohance Life Sciences (147X), the biggest private-equity game in town today. While the stock is undoubtedly expensive, it reflects strong margins and better return ratios than most of its peers.

Companies in India have been doing contract research, development, and manufacturing for global pharmaceutical companies for nearly three decades.

“The nature of the business has not changed in all these years. It’s still a matter of capex, of following the process that the customer gives you…you are a glorified rental company,” said the founder-CEO of a company in this space. “Instead of renting real estate, you rent a factory and its services.”

What has changed, though, is the geopolitics. After the American Biosecure Act of 2024A piece of US legislation that prohibits federal agencies and those receiving federal funding from procuring biotechnology equipment or services from companies linked to foreign adversaries, primarily China, India, which never had scale for biotech contract manufacturing, has suddenly found an opportunity at its door.

“Most of the companies with some kind of biotech operations are being approached for contract manufacturing,” said the CEO quoted above. Those like Anthem, Sai, Onesource, and Cohance fall squarely in that camp.

Syngene listed in 2015 when the contract research organisation (CRO) business was at an early growth phase; Anthem lists today when the industry is mature and on an upswing.