Anthem Biosciences' IPO Success Signals Surge in India's Biotech Sector: Here's How to Invest

The recent oversubscription of Anthem Biosciences' IPO marks a pivotal moment for India's pharmaceutical sector, signaling strong investor confidence in the country's biotech capabilities. With a final subscription of 1.19 times and a grey market premium suggesting a potential listing gain of 20%–23%, the IPO has become a catalyst for renewed interest in Indian drug developers. This momentum is not accidental—India's pharmaceutical industry is poised to capitalize on global demand for affordable, innovative therapies. Here's why investors should take notice and how to position portfolios for growth.

The Anthem IPO: A Microcosm of Sector Strength

Anthem Biosciences' IPO, which raised ₹3,395 crore through an offer-for-sale (OFS), highlights the sector's dual strengths: operational resilience and strategic ambition. The company, a leader in fermentation-based APIs and biologics, reported ₹1,844 crore in FY25 revenue and a 23.4% net margin, underpinning its 67–70x PE multiple. Its CRDMO (Contract Research, Development, and Manufacturing) model—integrating R&D, production, and distribution—has enabled it to serve 550 global clients across 44 countries.

The IPO's success, particularly the 2.94x oversubscription from non-institutional investors, reflects investor optimism about Anthem's expansion plans, including a third manufacturing unit to boost fermentation capacity to 182 kL by mid-2026. While risks such as customer concentration (81% of revenue from CRDMO services) remain, the IPO underscores the sector's broader appeal.

India's Pharma Sector: A Global Growth Engine

Anthem's journey mirrors the broader trajectory of India's pharmaceutical industry, which is driven by three key forces:

1. Export Dominance and Cost Efficiency

India supplies 60% of global vaccine demand and ranks as the world's fourth-largest pharma exporter, with FY23 exports exceeding ₹250 billion. Companies like Sun Pharmaceutical Industries (market cap ₹406,543 crore) and Divi's Laboratories (₹176,085 crore) leverage low production costs and a skilled workforce to undercut competitors in developed markets.

2. Government Backing and Regulatory Momentum

Initiatives like the Production-Linked Incentive (PLI) Scheme and the PMBJP (Pradhan Mantri Bhartiya Jeevan Praman Yojana) are accelerating domestic manufacturing and drug affordability. Additionally, India's regulatory body, CDSCO, has streamlined approvals for clinical trials, reducing time-to-market for new therapies.

3. Biotech Innovation and R&D Investment

Indian firms are moving beyond generics into high-margin biologics and biosimilars. Biocon, for instance, is developing diabetes and oncology treatments, while Sai Life Sciences focuses on contract R&D for global pharma giants. These trends align with the sector's goal to reach $130 billion in market value by 2030.

Risks to Consider

While the sector's prospects are bright, investors must account for risks:
- Regulatory hurdles: Delays in FDA or EMA approvals could disrupt export growth.
- Valuation pressures: High P/E multiples (e.g., Anthem's 70x) may compress if earnings growth falters.
- Currency volatility: A stronger dollar could eat into export profits.

How to Invest: Stocks and ETFs to Watch

To capitalize on this growth, investors can target direct equity plays or sector-focused funds:

Top Pharma Stocks

1. Sun Pharmaceutical Industries (SUNPHARMA.NS): A global generics leader with a 30% CAGR in exports since 2020.
2. Biocon Limited (BIOCON.NS): Specializes in biosimilars, with a 30% revenue CAGR from biologics.
3. Abbott India Limited (ABBOTINDIA.NS): Benefits from its parent's global reach and 500+ healthcare products in India.

Recommended Mutual Funds/ETFs

• ICICI Prudential Pharma Healthcare Fund (₹4,125 crore AUM, +29.56% 5Y return): Tracks large-cap pharma and healthcare firms.
• Nippon India Pharma Fund (₹7,404 crore AUM, +27.67% 5Y return): Focuses on export-driven companies like Divi's and Zydus.
• DSP Healthcare Fund (₹2,479 crore AUM, +30.64% 5Y return): Offers exposure to diversified healthcare innovators.

Conclusion: A Sector for the Long Run

Anthem's IPO success is more than a financial milestone—it's a testament to India's emergence as a global biotech powerhouse. With strong fundamentals, supportive policies, and a growing pipeline of innovative therapies, the sector is primed for sustained growth. Investors should prioritize quality names with R&D strength and diversify via sector funds to mitigate risks. While short-term volatility is inevitable, the long-term story remains compelling.

For conservative investors, start with a 5–10% allocation to pharma ETFs. Aggressive investors may consider direct stakes in companies like Biocon or Anthem post-listing, but monitor valuation multiples closely.

The future of global healthcare is being written in India—and now is the time to take a seat at the table.