Piramal Pharma Targets Complex Drug Market for Earnings Growth
India's Piramal Pharma Aims for Accelerated Earnings Growth
India's Piramal Pharma is optimistic about its future prospects, driven by increasing demand for complex drugs, including targeted cancer therapies. The company, which generates 55% of its revenue from contract drug manufacturing, is poised to benefit from the improving global biotech funding landscape.
According to Nandini Piramal, chairperson of Piramal Pharma, biotech funding in the second half of the year was approximately 80% higher than in the same period last year. This surge in funding is translating into higher requests for proposals and order inflows. Piramal attributes the funding pick-up to lower interest rates and reduced uncertainty in the U.S. pharma sector.
Piramal Pharma is expecting to achieve revenue growth in the early-to-mid-teens over the next two to three years. However, the company reported a 3% drop in fiscal 2026 revenue, primarily due to a 10% slump in its contract drug manufacturing business. This decline in revenue led to a reduction in margins to 13% from 17%.
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| Sector | Fiscal 2026 Revenue Growth |
|---|---|
| Contract Manufacturing | -10% |
| Overall Revenue | -3% |
The company is prioritizing higher-value segments within contract manufacturing, such as antibody-drug conjugates (ADCs). ADCs are targeted cancer therapies that link chemotherapy drugs to antibodies, and global demand for these products is rising as drugmakers expand their oncology pipelines. Piramal Pharma has added a significant number of customers, including big pharma and biotech companies, in this sector.
On the other hand, the company is not prioritizing the production of active ingredients for weight-loss drugs, generic semaglutides, due to intense competition and falling prices in the market. However, Piramal notes that high fixed-cost businesses, such as ADCs, will benefit from increased revenues and operating leverage.
The Indian rupee currently trades at approximately 94.84 per U.S. dollar.
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Investor Takeaway
Investors should consider Piramal Pharma's growth prospects driven by rising demand for complex drugs.
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