Piramal Pharma bets on US biopharma funding uptick to lift growth

MUMBAI: Nandini Piramal, chairperson of Piramal Pharma, speaking to reporters on Thursday, said a rebound in US biopharma funding could boost future orders, even as the company on Wednesday reported a 9% fall in Q2FY26 revenues, hit by a sharp decline in its contract manufacturing business.

The company reported a net loss of ₹99 crore for the quarter, compared with a profit of ₹23 crore in the same period last year, while its Ebitda margin shrank to 11% from 18% in Q2FY25.

The CDMO (contract development and manufacturing) segment, the company’s largest revenue driver, posted a 21% year-on-year (YoY) decline to ₹1,044 crore, primarily due to inventory destocking by a key client ahead of a product launch.

“There has been a lot of uncertainty, but I will say some of that uncertainty seems to be resolving,” Piramal told reporters in a post-earnings press conference on Thursday. “We’ve now seen an uptick in biopharma funding in both September and October, we’ve also seen a resumption of M&As, and I think along with the cut in interest rates, people are feeling more optimistic,” she added.

Piramal had earlier told Mint that uncertainties over US President Trump’s tariffs on pharmaceutical imports, along with domestic factors such as the biotech funding freeze, had led potential clients to pause decisions on its contract manufacturing business.

This uncertainty, she said, is easing. “The improvement in funding and optimism kind of helps people make decisions.”

“We’re seeing an increase in RFPs (requests for proposals), especially for our onshore manufacturing facilities and our differentiated capabilities,” Piramal said, adding that any funding improvement in this space would translate into revenues for the company next year or the year after.

Outlook remains positive

While the CDMO segment bore the brunt of the slowdown, the Piramal Pharma’s other businesses held steady. The complex hospital generics business remained flat at ₹644 crore, while domestic consumer health grew 15% to ₹319 crore.

The company’s CDMO revenue decline was partly linked to a pause in orders from a large client, who had loaded up inventory ahead of a product launch. Piramal said it does not expect any orders from this client for the financial year but described the pause as temporary.

Analysts at Kotak Institutional Equities had baked in a 17% YoY decline in CDMO sales for Piramal Pharma during the quarter due to inventory rationalisation and projected overall sales to dip by 8% YoY.

Piramal said it expects an uptick in performance in H2FY26. “That's kind of been the tradition in this business. It is a bit of a seasonal business. So, we expect H2 revenue and Ebitda to be higher,” she said.

The company is continuing its previously announced capacity expansion in two US facilities, Lexington, Kentucky, and Riverview, Michigan, for which it had previously announced a $90 million investment. During the quarter, it also entered into a multi-million-dollar joint investment with NewAmsterdam Pharma for fixed dose combinations at its Sellersville, Pennsylvania site.

Piramal said the company is still on track to meet its FY30 guidance of doubling revenue to $2 billion and increasing Ebitda margin to 25%. “We think that the basics and the fundamentals of the business are still strong, and we are seeing early signs of improvement with a funding uptick for the CDMO business and a higher rate of RFPs,” she said.

“The CDMO business is PPL’s best long-term growth lever. The exposure to innovative drug pipelines and complex biologics makes it structurally higher margin business,” Incred Equities analysts said in a September 24 note. “However, this business is also sensitive to global biotech funding cycles and regulatory execution risks, which means PPL must continue to invest in compliance, technology platforms, and capacity expansion to maintain competitiveness,” they added.

Incred analysts have pencilled-in a service business Ebitda margin of 12.9% in FY26, expanding by 50 basis points annually through FY28.

Shares of Piramal Pharma closed a tad higher at ₹200.60 apiece on the National Stock Exchange on Thursday.