Ozempic-like weight loss drugs to power OneSource as global demand soars

These Ozempic and Wegovy mimics use the glucagon-like peptide-1 (GLP-1) hormone to regulate blood sugar, and metabolism thereby reducing food intake. 

With several GLP-1 drugs going off patent in the next few years, OneSource is poised to see big growth in the generic GLP-1 space. GLP-1 drugs, like Danish drugmaker Novo Nordisk’s semaglutide, have been game changers in obesity treatment, with demand across the globe soaring. “In generic GLP-1s, we were the first to enter and today we are the only ones offering complete end-to-end solutions," Sharma told Mint in an interview.

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OneSource has a formidable position in the generic GLP-1s because it offers end-to-end services including formulation and assembly into the device. 

GLP-1 drugs are mostly used through pens. “The most complex part of the whole value chain is to assemble that pen," Sharma said. “We are able to handle multiple types of pen devices," he added.

Drug-device combinations, like the GLP-1 pens, is one business under OneSource Specialty Pharma. The firm also has a biologics business, a sterile injectables business, and a soft-gelatin capsules business.

Arun Kumar-led Strides Pharma Science, which has a market cap of ₹6,507 crore, announced the creation of OneSource Specialty Pharma, a specialty pharma pure-play CDMO player in September 2023—integrating Stelis Biopharma Ltd, Strides' Oral Technologies (soft gelatin capsules) and SteriScience’s Specialty Injectables businesses into a single entity. It received approval from the National Company Law Tribunal (NCLT) for the business last month.

The company is now in the process of submitting its Information Memorandum this month, to secure the necessary listing approval. It plans to list in the second fortnight of January, Sharma said.

Last month, the company secured an equity commitment of $95 million from marquee investors, bringing it to a pre-money equity valuation of $1.65 billion.

Expansion plans

The company plans to double its revenue in the next three to four years, Sharma said. It also plans to grow its Ebitda margins from about 34% currently to over 40% in the same period, according to the company’s investor presentation.

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It has five manufacturing plants, four of which are USFDA approved. The company is looking at expansion, including onshore facilities in regulated markets, Sharma said. “As a global CDMO, we always keep looking for opportunities to have other sites, and we will continue to look at that," he said.

Anticipating demand, the company is also scaling up capacity at its existing facilities. For its biologics business, it currently has 1,000 litres microbial capacity, planned to be expanded by 5,000 litres, and 4,000 litres of installed mammalian capacity to be expanded to 20,000 litres, its investor presentation showed.

It currently has capacities to produce over 100 million sterile dosages and about 2.4 billion capsules annually. The company plans to reach over 200 million dosages for sterile injectables and drug-device combinations in the next 3-4 years.

A key focus for the company going forward is to ensure that it has the capacity to meet the demand growth. “We are already investing in capacity expansion ahead of time proactively," he said. Another focus area is to maintain its compliance track record.

Biologics a gestation business

While the company is foreseeing strong growth in the near term in its sterile injectables, device-drug combinations and soft-gel capsules businesses, “biologics will have a small contribution in that…because we know that biologics will be big contribution to us beyond 2028," Sharma said.

There are tailwinds like the US Biosecure Act, which, if passed, would prohibit US life sciences companies from doing business with some key Chinese biotech majors, and drive potential business to India. But it’s not just that, Sharma pointed out. “The [larger] trend is toward diversification of supply chains…we saw the ill effects of concentrating supply chains in one country during the pandemic."

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OneSource has seen a significant increase in request for proposals (RFPs) in the last two quarters (over 35 RFPs at various stages of discussion, according to its investor presentation). However, the growth rate there is slower.

“Few entrepreneurs understand that these businesses are high capex, long gestation," Sharma said. Onboarding a biologics client can take 12-24 months, he added. They need to be convinced about your capabilities, even after that, the whole diligence process takes very long," he said.

But biologics is a sticky business and “once the customer comes in, they are a customer for life," he said.

A lot of the enquiries that OneSource is getting are for new projects, as well as from businesses looking for a second source apart from China.