2024-11-21 05:30:12 :
Piramal Pharmaceuticals Ltd believes its U.S. facilities can help it weather volatility in the U.S.’s largest market following Donald Trump’s return, chairman Nandini Piramal said.
She says a second Trump administration could create uncertainty for drug companies Mintreferring to his plan to impose import tariffs to make American industry stronger. “I do think volatility is going to increase, but one of the benefits is that we do have manufacturing in the states. For customers who can pay the price, we can manufacture for them. Overall, the Indian industry offers lower prices to global patients , which is a good thing.”
Nearly two-thirds of Piramal Pharma’s revenue comes from developed markets, with the United States accounting for 35%. The company has three facilities in the United States: Riverview, Mich., for the production of highly potent active pharmaceutical ingredients (APIs); Sellersville, Pa., for the production of oral solids, creams, liquids and ointments; and Lexington, Ky., for the production of pharmaceuticals. Bacterial injections.
The company also expects to gain a better position in the United States in the coming years as the Biosecurity Act comes into effect.
The U.S. House of Representatives passed the bill in September, banning U.S. pharmaceutical companies from doing business with certain Chinese pharmaceutical companies starting in 2032. Since then, all eyes have been on Indian contract development and manufacturing organizations (CDMOs) such as Piramal Pharma, Syngene and Neuland Labs, which believe companies will look to shift their supply chains to another base.
Coming tailwind
Piramal said that while tailwinds appear to be coming, U.S. companies still have seven years to shift strategy and China remains a cheaper option. In addition, the bill still needs to be passed by the U.S. Senate.
Piramal said they have seen an increase in requests for proposals (RFPs) as U.S. companies try to understand the capabilities. “But so far, no one has made a decision.”
Sujay Shetty, global health industry consulting leader at PwC India, said it may be too early to predict the volatility the Trump regime may bring to Indian pharmaceutical companies. “There may be less regulation and more focus on affordability,” he told us Mint. “Certainly the biosecurity bill and localization will get a lot of attention… We know so much so far, but I think it’s too early to move beyond that.”
According to an October report by McKinsey & Company, India could account for 8-10% of the global share of work outsourced to CDMOs by 2033, driven primarily by geopolitical changes. Most Indian CRDMOs expect 20-40% of new business to come from these changes, the report said. The global CDMO industry is expected to rise to $It is expected to reach 39.2 trillion by 2032 $Currently 18.8 trillion.
Piramal Pharma will focus on expanding production capacity at existing facilities in the United States and has no current plans to set up additional facilities.
“In the last three years, we’ve expanded our Aurora facility, our Riverview facility in Michigan, and now we’re expanding our facility in Kentucky (Lexington),” Piramal said. “As we build each facility , we have all left space so that you don’t have to expand in the next 2-3 years.”
UK opportunities
Piramal said that while the company was confident of dealing with potential unrest in the US, the UK was also “a very important part of our offering”.
“The Grangemouth site is the only site producing antibody-drug conjugates, which is a very interesting area,” she said. “That’s again one of our magnets that brings people to us. It’s an area that I’m focused on. I’m excited.”
But growth in the injectable painkiller segment remained slow last quarter due to supply constraints. “We have two [Europe-based] Contract manufacturing organizations (CMOs) are finding it difficult to supply us with the volumes we need…” Piramal said. “We are working with them to see what we can prioritize, how to get more supply in the short term and in the long term. . “
Focus on powerful brands
The company seeks to strengthen existing capabilities in its CDMO business. “The focus is more on expanding the capabilities that we have… We may look at acquiring skills and capabilities that we don’t have,” Piramal said. “But I think the main focus will be on expanding what we have. capabilities because it’s the fastest way to profitable growth.”
Piramal plans to invest over $Investment of Rs 7 billion (USD 85 million) in brownfield expansion in FY25. This capital expenditure will be allocated primarily to the company’s CDMO segment, Mint reported earlier.
As Piramal Pharma expands its global footprint, the additional capacity could be an advantage, especially considering U.S. companies considering transitions due to the Biosecurity Act. “If you want to get into biosimilars, if you want to get into clinical trials, if you want to get into drug development, if you want to get into anywhere in the supply chain — compared to what Chinese companies are doing — then you have to Build technical capabilities in these areas,” said PwC India’s Shetty.
The company also seeks to increase sales and manage supply constraints in its hospital generics business, as well as launch new products. Earlier this year, the company launched Neoatricon (a drug for neonatal hypotension, or low blood pressure).
The drugmaker’s Indian consumer healthcare business saw a jump in online sales. Online sales grew 30% in the first half of the fiscal year and will soon account for 20% of total sales, Piramal said during a post-earnings call with investors last month.
“We often use the online space to try out our new products,” Piramal tells us Mint. “You have to be where the consumer is. Especially during COVID-19, a lot of people moved online.” She added that the company is focusing on an omnichannel approach. Piramal Pharma’s Indian consumer healthcare business posted double-digit growth in the first half of the financial year. The company’s goal is achieved $Turnover for the current financial year is Rs 1,000 crore $Piramal said it will reach Rs 940 crore in fiscal 2024.
“We want to continue to grow sales of our strong brands (CIR adult diapers, Little’s baby care products and Tetmosol ointment). Last quarter, the strong brands actually grew 18%. So, that’s the trajectory we want to continue on overall, ” she said.
growth conundrum
Amid mounting debt, the company is advancing an organic growth strategy rather than actively seeking acquisition opportunities in the short term, Mint reported earlier. Piramal Pharma keen to cut expenses $Debt stands at Rs 4,200 crore (as of September 2024), but it also intends to make up for lost growth momentum during Covid-19.
“CDMOs are a business where first movers should have a huge advantage, and Piramal Pharma is one of the first movers,” said Aditya Khemka of InCred Asset Management and Alternative Investments.
Talking about the reason for the slowdown, Piramal said: “I think it’s possible that before COVID-19, we were actually at capacity, and during COVID-19 we didn’t continue to expand. We actually paused because we weren’t sure . . . Maybe if we continue to expand, we can get some benefit from the post-COVID shock,” she said. “It took us longer to complete the expansion.
Rival Suven Pharma’s revenue growth $833.79 Crore in FY21 $1,009.72 crore in FY22, according to Capitalmarket data. Divi’s Laboratories Ltd’s revenue growth comes from $5,394.42 Crores Rs. $6,969.4 billion in FY22. Sun Pharma’s revenue grew from $6,880.23 Crore in FY21 $8,753.25 crore in FY22.
Piramal Pharma was spun off from parent company Piramal Enterprises Ltd in 2022. The company listed on the exchange as a separate entity that year, so it’s difficult to determine the company’s growth trajectory compared to its peers in the pre-IPO period.
However, the company reported slow growth in FY22 and FY23, but has seen steady growth in its CDMO business since then. The company’s revenue grew 24% in the second quarter ended September 2024.
Motilal Oswal Research Analyst Tushar Manudhane, along with other research analysts, wrote in an October report that Piramal Pharma is poised to benefit from its differentiated capabilities and capabilities as inquiries on the CDMO front rise at the industry level in India . “The company is increasing its product offerings in the CHG space (complex hospital generics) through its established global network,” the company said, reiterating a buy rating on the stock.
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