Just a question: how hard is to develop ADC capabilities ?
Is the gestation period an advantage ?
Piramal Pharma -
Q2 FY 24 results and concall highlights -
Q2 outcomes -
Revenues - 2242 vs 1911 cr, up 17 pc
EBITDA - 403 vs 315 cr, up 28 pc ( margins @ 18 vs 16 pc YoY )
PAT - 23 vs 5 cr
Breakup of Q2 revenues -
CDMO - 1324 vs 1068 cr, up 24 pc
Complex Hospital Generics ( CHG ) - 643 vs 589 cr, up 9 pc
India consumer healthcare ( ICH ) - 277 vs 256 cr, up 8 pc
CDMO vertical’s growth was led by pick up in Innovation related work and on - patent commercial manufacturing. Company has announced a capex of aprox 680 cr for sterile fill finish capabilities at their Lexington facility
CHG is seeing steady volume growth in Inhalation anaesthesia products ( Sevoflurane and Isoflurane ). Company is expanding its capacities @ Dahej and Digwal plants for inhalation anaesthesia products. Company has a product pipeline of 24 products to be launched over next 2-3 yrs in CHG division
ICH growth led by power brands and pick up in E-Comm sales. Power brands ( like - Littles, Lactocalamine, Tetmosol, I-Pill etc ) grew @ 18 pc YoY and now comprise of 48 pc of ICH sales. Launched 9 new products in H1 under the ICH business
Committed to 17000 cr topline with 25 pc EBITDA margins by 2030
Net Debt stands @ 4235 cr ( as on 30 Sep 24 )
50 pc of revenues of the CDMO division is coming from innovation related work ( ie development + commercial manufacturing of on-patent molecules )
The additional capex @ Lexington facility will double their sterile fill finish capacity + lyophilisation capacities and should go commercial by end of FY 27. Company has tied up with multiple customers to commercialise their products from this facility post the expansion
The capex @ Digiwal is to commence manufacturing of Sevoflurane in India for the RoW markets ( they were earlier making Sevofluranne from their US facility @ Bethlehem ). The capex @ Dhaej is to produce the KSM for manufacturing of Sevoflurane
In general, 35 pc of company’s EBITDA comes from H1 and 65 pc comes from H2
New product launches in the India Consumer Health business in H1 include -
Littles - Baby Diapers
Littles - Baby Detergent
I-Active - Period panties
I-Feel - Intimate women wash
Bohem - Men’s hair removal spray
Tri-Active - Mosquito nets
In the injectable pain management segment, their growth remained slow due to supply constraints. They are taking multiple initiatives to strengthen the supply chain. These initiatives are gradually yielding results. In the intrathecal segment, company continues to defend their leadership position in the Baclofen market in the U.S. with over 70% market share
Company is seeing good traction in US in their differentiated product offerings like - Gablofen ( Intrathecal muscle relaxant ), Mitigo ( Morphine - Injectable ), Neoatricon ( Hypotensive - for low BP management in infants ). Would like to build further on such products pipeline
Company intends to diversify the distribution of their ICH business from being Pharmacy + E-Comm focussed to other channels like - modern retail, general trade etc
Company is exited about their new complex product - Neoatricon as it has the potential to remove the manual dosing errors by healthcare professionals while dosing infants. However, they did not comment on its potential mkt size
Seeing higher customer enquiries, visits, RFPs in their CDMO segment due improved biotech funding environment and global supply chain de-risking drives
Current ( as of Mar 24 ) scale of on patent commercial manufacturing for the company is aprox 1700 cr / yr. Revenues from Development + Discovery are around 800 cr cr / yr. Basically the innovative part of CDMO business has a 70:30 split between commercial manufacturing : discovery + development
No of molecules in Phase - 1, 2, 3 development stages @ 68, 38, 33 - as on 31 Mar 24. This looks like a very healthy pipeline
A large portion of some one-off spends in company’s CHG business are expected to hit P&L in Q3. Q4 should be their largest Qtr wrt revenues and profitability
The Lexington capex being undertaken by the company is against firm orders from the customers
Disc: holding from lower levels, at present - the stock price may not be cheap but one may look to start buying if the stock price corrects by 10-15 pc, not SEBI registered, biased, views are personal
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JM_Financial_Initiating_Coverage_on_Piramal_Pharma,_with_36%_UPSIDE.pdf (1.8 MB)
Initiating coverage report by by JM Financial, target of INR 340
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https://www.bseindia.com/xml-data/corpfiling/AttachLive/7c481d38-3856-4341-9b96-ba12d3b4d67b.pdf
Key Highlights for Q3FY25/9MFY25
- Consolidated profit after tax (PAT) fell 63.6 per cent year-on-year (Y-o-Y) to Rs 3.6 crore.
- Revenue from Operations grew by 14% YoY for 9MFY25, primarily driven by high-teen growth in the CDMO business. Sequentially, revenue from operations declined by 1.67 per cent, with PAT falling 83.7 percent.
- EBITDA grew by 20% YoY for 9MFY25, supported by operating leverage, cost optimization initiatives and superior revenue mix.
- Net-Debt to EBITDA ratio maintained at 2.8x.
- Best-in-Class Quality Track Record - No pending observation at any of our US FDA inspected sites.
- Significant Step Towards Sustainable Operations - Converted the coal-fired steam boiler at our Digwal facility to operate on biomass briquettes, a carbon-neutral fuel source. This will eliminate ~24,000 tCO2e1 GHG2 emissions annually accounting for about 17% of our total emissions.
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Piramal Pharma Q3FY25 Concall Highlights
- FY25 Guidance: Maintain guidance of early teens revenue growth with significant margin expansion
CDMO
- CDMO EBITDA margins expanded YoY driven by operating leverage, higher share of innovation related work and differentiated offerings
- CDMO growth continues to be driven by commercial segment and development segment continues to be muted due to lower uptick in biotech funding environment
- Integrated projects allows the company to capture more parts of value chain so absolute value of profitability would be higher but margins would be similar or higher
- Biotech Funding: Management is cautiously optimistic regarding uptick in biotech funding based on various factors like general sentiment and commentary from customers but there still exists volatility and uncertainty in outlook
- Company already has on-shore facilities in US if customers want on-shore manufactured products but uncertainty exists due to political changes in the US
CHG
- Renewed key tenders for Sevoflourane in US market
- CHG supply issues: Growth constrained due to supply side issues but have started working with new CMO partner to alleviate the issue
- CHG Digwal facility has been completed and will start filing products from FY26 and benefits expected to start from FY26
Others
- Higher profit share from locations where tax rates are higher. Will see reduction in tax rate in Q4FY25 as profitability is more broad-based across different locations
- ICH margins are the lowest amongst the 3 segments
- Around USD2mn of one-off expenses were there in Q3FY25
- Currently not planning for any new M&A activity
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Good interview of Peter DeYoung Piramal Pharma CEO. Key highlights
- The top 20 customers have shown the highest growth.
- Patent work is growing the fastest.
- Differentiated capabilities (in patents, fill-finish, ADCs, and peptides) are growing faster than the overall business.
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Any idea as to how PPL covers the scope of ADC Drug development phase? They have disclosed a substantial portion of overall CDMO sales is from commercials, and shall continue to remain, but still not very clear to me.
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From Q3FY25 Concall
Financial Performance
- Q3 FY25:
- Revenue from operations: ₹2,204 Cr , reflecting a 13% YoY growth
- EBITDA: ₹350 Cr , up 6% YoY
- EBITDA margin: 16%
- 9M FY25:
- Revenue from operations: ₹6,397 Cr , up 14% YoY
- Growth was driven by high-teen expansion in the CDMO business
- EBITDA: ₹977 Cr , up 20% YoY
- EBITDA margin: 15% , supported by operating leverage, cost optimization, and a superior revenue mix
Segment-Wise Highlights
1. CDMO (Contract Development & Manufacturing Organization)
- Q3 revenue at ₹1,278 Cr , up 13% YoY ; 9M revenue at ₹3,659 Cr , up 18% YoY .
- Growth was led by increased revenue from on-patent commercial manufacturing .
- Stronger margins due to operating leverage, improved business mix, and better procurement strategies .
- CDMO industry outlook remains positive, with an improving biotech funding environment expected to drive order inflows.
- Increased customer inquiries and RFPs indicate rising demand for supply chain diversification .
2. Complex Hospital Generics (CHG)
- Q3 revenue at ₹654 Cr , up 14% YoY ; 9M revenue at ₹1,928 Cr , up 8% YoY .
- Growth fueled by volume uptick in the Inhalation Anesthesia portfolio in the US.
- Strengthened market share in Sevoflurane in the US through renewed peak tenders.
- Expansion projects at Digwal and Dahej are progressing and expected to contribute to growth in the next fiscal year.
- Demand for Inhalation Anesthesia remains strong , with limited competition.
3. Intrathecal Therapy
- The company maintains over 70% market share in the US for Baclofen .
- Mitigo (morphine sulfate) showed strong sales during the quarter.
- Growth in injectable pain management was limited due to supply issues, but efforts are underway to enhance supply through CMO partnerships.
- New injectable products launched in the US and Europe, with differentiated and specialty products expected to drive future growth.
4. India Consumer Healthcare (ICH)
- 9M FY25 Power Brands grew by 19% , despite broader industry slowdown.
- Excluding i-range (under price control) , Power Brands grew 26% , led by Little’s, CIR, and Polycrol .
- Investments in marketing, distribution expansion, and e-commerce (which grew 40% in 9M , contributing 20% of total ICH sales ) continue to drive momentum.
- 40 new products and SKUs launched this year, with several showing strong performance.
Business Dynamics & Industry Outlook
- CDMO growth is driven by commercial manufacturing, while development business remains subdued due to the biotech funding crisis.
- Profitability remains comparable between US and India, with scale playing a key role .
- The company is currently paying a high effective tax rate (ETR) due to the mix of profits from high-tax jurisdictions, which is expected to normalize in Q4 as profitability across multiple sites improves.
- Q4 is projected to be the biggest quarter in absolute terms, supporting an improved effective tax rate.
Exceptional Item
- A one-off cost of $4 million was planned to be booked in H1 and Q3, but due to partial realization, the remaining will be booked in Q4.
Capex & Expansion
- The Digwal facility for Sevoflurane has been completed and will begin filing in various markets, benefiting from the next fiscal year.
- The Dahej facility expansion is progressing well, expected to contribute next fiscal year, with a lower regulatory hurdle .
Sustainability Initiatives
- Transitioned the coal-fired steam boiler at the Digwal facility to operate on biomass briquettes , a carbon-neutral fuel source .
- This initiative will eliminate ~24,000 tCO2e GHG emissions annually , accounting for 17% of total emissions .
Future Growth Outlook
- The company has set ambitious targets for FY30, aiming to double revenue to $2 billion with 25% EBITDA margins and a high-teens ROCE .
- With Q4 expected to be the strongest quarter of the year
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Any good sources for understanding the following :
CDRMO market size both globally and India for 1) Innovator 2) Generic
A good source for estimating the growth rate in the above for India
Logical growth rates for PPL in 1. CDRMO 2) CHG and 3) ICH
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Piramal group is slowly moving away from a group known for transparent communication and ethical business practices to a typical promoter run company focusing on self benefits and less on stakeholder best practices.
One example of that is appointment of statutory auditors. Earlier Piramal enterprises (before demerger) was audited by big 4 firm Deloitte. Once demerged, Piramal Ent (financial business) moved to a local auditor M/s.Suresh Surana and now even Piramal Pharma has decided to hire the same firm replacing Deloitte…
Considering Piramal Pharma’s global footprint and ambitions, this move is very puzzling. For its balance sheet size, cost reduction cannot be the driving factor for this change. Highly disappointed
Disclosure - Piramal pharma is part of my core holding
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They are part of a big organization called RSM International.
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I feel first quarter will be very tepid as always the case. My estimate for Q1 numbers is Revenue : 2100 Cr, EBIDTA @10% would be 200 -220 Cr. PAT will be negative as Depreciation & Interest cost per quarter is approx 300 Cr. Due to planned expansion in USA debt will be higher again
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They have guided for muted FY26 overall. So, not expecting much anything this year.
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I understand that. But at least losses should be minimized or no loss scenario. Due to high depreciation (continuous expansion) and interest payment (higher debt) a minimum of 300 Cr EBIDTA is required just to be at NO loss scenario. Looks like this year bottom-line would be mostly negative…Q1 for sure
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Looks like PPL’s client got drug approval in June 2025 and product is scheduled to be launched in Q4-2025.
Looking at the launch date, PPL must have already supplied key ingredients to it already buy may see benefit if the product has good response.
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What happened to the Thane facility?
The company has reported 17 development and manufacturing sites in its annual reports from FY23 to FY25, as well as in the rights issue prospectus.
It invested in Yapan Bio in December 2021 and increased its stake to 33.33% in April 2022. Yapan Bio’s facilities in Hyderabad are included in the company’s list of manufacturing sites, as illustrated in the following screenshot from the 2025 annual report.
However, in earlier annual reports, this Hyderabad facility was not included, as shown in the screenshot from the 2024 annual report below.
What we observe is that the Hyderabad facility was not included in annual reports before FY25, despite the company holding a stake in Yapan Bio at that time. The total number of facilities remains unchanged at 17.
Previously, there was a Thane facility listed for ‘Peptide API R&D’.
In the FY25 annual report, this Thane facility is removed, and the Hyderabad facility appears instead.
My Questions
- Why was the Thane facility listed separately in earlier reports?
- Why was the Hyderabad facility not mentioned before?
- And, given that the Hyderabad facility is held through a minority stake, should it be included at all?
I also emailed the company’s IR team but have not received any response.
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Thane facility was decommissioned unit and was sold as per notification dated 22nd July (attached). There was no income from this facility as per the announcement.
I am not sure why it was shown as Peptide R&D earlier (company may have been planning and may have changed). Hyderabad facility if owned minority stake then need not be disclosed
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I feel that they should not have replaced that facility with one from Yapan Bio just to maintain the numbers.
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