Piramal Pharma Limited is expecting to have increased revenue growth in the next quarter. In an interview with Financial Express.com, Nandini Piramal, Chairperson, Piramal Pharma Limited said that although last year was difficult, they focused not just on revenue visibility but also on cost and operational excellence in this quarter.
Piramal Pharma Limited (PPL) offers a portfolio of differentiated products and services through end-to-end manufacturing capabilities across 15 global facilities and a global distribution network in over 100 countries.
PPL includes Piramal Pharma Solutions (PPS), an integrated Contract Development and Manufacturing Organisation (CDMO), Piramal Critical Care (PCC), a Complex Hospital Generics business, and the India Consumer Healthcare business selling over-the-counter products.
“Overall last year was a difficult year for us…then we focused a lot on both revenue visibility as well as cost and operational excellence. So this is a year of recovery and turnaround. Our revenue from Operations grew by 11% YoY in Q2 FY2024 and 14% YoY in H1 FY2024…It’s just basically focused on revenue growth and cost optimization. And we expect that for the next quarter, half our revenue growth should be in the mid-teens. We also did a rights issue, which we closed in August. We successfully completed our Rights Issue of Rs.1,050Cr with subscription of 128 per cent,” Piramal told Financial Express.com.
A significant part of these proceeds have been utilized for debt repayment – Net debt reduced by Rs.958Cr since March 2023, she said.
“The company’s debt was reduced from 4,781 crores to 3,823 crores. The focus again, going forward is organic revenue growth, cost optimization, productivity improvement, and operational improvement. We want to reduce our debt even further. You know, we spent a fair amount of time over last year, finishing some brownfield capex that we had. We just opened something in that range map facility this September, but before that, we did something in Turbhe capacity expansion in Navi Mumbai as well as Riverview, Michigan, and Aurora, Canada. I think what we see going forward is, as this kind of capacity expansions comes online, you should get revenue growth, and then you get operating advantage because you don’t necessarily increase the number of people in the same depth, the same way,” she told Financial Express.com.
In October 2022, Piramal Pharma Ltd (PPL) demerged from Piramal Enterprises Ltd (PEL).
Last month, the company reported an 11 percent year-on-year rise in its consolidated revenue from operations to ₹1,911 crore from ₹1,720 crore in Q2FY23, driven by strong performance across all three of its businesses.
According to the company’s exchange filing, the consolidated profit after tax (PAT) was at ₹5 crore in the quarter, as against a loss in the corresponding quarter last fiscal year.
She also told Financial Express.com that the opportunities in the CDMO business exist because outsourcing as a trend is not going to stop.
“…55% of our business is contract manufacturing, 30% of our business is hospital generics, and about 15% is OTC. So, you know, in a way that you think about it, the opportunities in the CDMO business are there because outsourcing as a trend is not going to stop. In addition, that’s going to continue to happen. The challenge is the interest rates have risen and we see funding overall is less,” she pointed out.
However, I think we are reasonably optimistic about our order book, and we have good visibility on that..in addition, we see that there will be growth for us, she added.
While talking about Q2FY24, she said that H2 is better than H1. She also said that they expect that going forward their EBITDA revenue growth “will be meaningful, it will be mid-teens, and EBITDA will be higher meaningfully than what it was last year.”
The Chairperson also talked about various measures taken by Piramal Pharma Limited in the sustainability segment.
“…We spent a fair amount of attention on sustainability; we signed up for this concept called science-based targets, which makes you commit to targets such that we can contain global warming to a 1.5 degrees Celsius increase. So what it translates to us, from the base year 2022, we’re going to reduce Scope 1 and Scope 2 emissions by 42% by FY2030 (against the baseline of FY2022)So in seven years, we reduce our carbon emissions, focusing on a lot on both water stewardship, aiming to reduce the amount of water we take. 9,760 KL fresh water was saved by collecting rainwater and reusing it. 32.8 percent of wastewater generated was recycled and reused in utilities. We are also looking to reduce and do zero waste to the landfill. So that by FY25 we want to reduce, we want to have zero waste,” she added.
“We’re also doing solar panels wherever we can, some of our plants like our Pithampur plant actually will be on 100 percent renewable electricity, so wherever we can, we’re trying to do either solar or hydro or renewable energy where it’s possible,” she revealed.
The company has three business verticals – contract development and manufacturing organization (CDMO), complex hospital generics (CHG), and India consumer healthcare (ICH). According to Q2FY24 results, The CDMO received 40% more orders during the quarter, delivering 14% yoy revenue growth. The improvement in CDMO’s profitability was driven by revenue growth, a favourable revenue mix, normalization of raw material costs, and cost-optimisation initiatives, it stated.
In the drug discovery segment, Piramal told Financial Express.com that they have 38 molecules that the company is working with for other companies and they have reached phase III trial.
“And we expect that some of those will become commercial over the next six months to a year going forward,” she told Financial Express.com.
She also informed that there are currently no portfolio diversification or expansion plans.
“..the focus is on revenue growth. And then if we look at it, cost control and operational excellence. Kind of those are the other pillars of it…we focus a lot on quality. Over the last six months, we have had five FDA audits, of which four have been closed. Therefore, I think the FDA’s record of accomplishment is strong. In addition, that’s something we focused on and maintain the quality system to the highest standards,” she told Financial Express.com.
