Piramal Pharma to see muted CDMO growth on US jitters; strong recovery in FY27

Piramal Pharma anticipates muted, single-digit growth for its contract development and manufacturing organization (CDMO) business in FY26, hurt by near-term uncertainties as clients defer decisions amid concerns over US pricing and tariff policies, a top company official said.

However, the Mumbai-based firm expects a quick recovery in FY27, and is on track to achieve its target of becoming a $2-billion company with 25% Ebitda (earnings before interest, taxes, depreciation, and amortization) margins by FY30, chairperson Nandini Piramal told Mint.

“There’s been an increase in uncertainty and volatility…wher you’ve got pricing [cuts], whether you’ve got tariffs, or biotech funding which has been kind of uneven,” Piramal said. “A lot of customers are pausing on decision-making,” She said, adding that the company has seen an increase in requests for proposals (RFPs) from potential clients. “They're trying to scenario-play all the options.”

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A CDMO is a company that provides comprehensive services, from drug development to clinical trials and drug manufacturing to other pharmaceutical and biotech firms on a contract basis.

“In FY27, we should see a significant and a strong recovery,” she added.

Earlier this week, Trump signed an executive order to bring down the costs of prescription drugs in the US to match the cheapest global prices. Additionally, he has indicated imposing import tariffs on pharmaceutical products with the view of bringing manufacturing back to US. However, a lot of uncertainty persists over the implementation and details of these orders.

Piramal Pharma expects steady growth for its consumer healthcare business and complex hospital generics in the coming year, she said, adding that the company is well-poised to service demand in the CDMO business.

“Once the uncertainty dies down, we have the capacity and the capabilities and one of the best networks in the US, the UK, and India, depending on where our customers want to manufacture their products,” Piramal said.

The CDMO business contributed 59% to Piramal Pharma’s overall revenues in FY25.

Expansion in the US

Earlier this week, the firm announced a $90 million investment to expand its manufacturing capabilities at two key US facilities - Lexington in Kentucky and Riverview in Michigan.

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Piramal said that there has been a rise in demand for onshoring post-covid, “especially for on-patent pharmaceuticals and some of the more complex drugs…to be closer to the customer”.

The expansion of the Lexington facility is expected to be completed by calendar year 2027, while the Riverview facility expansion will be completed this calendar year.

On track for growth

The company saw significant recovery in FY24 and FY25, with a 14% compounded annual growth rate (CAGR), over 500 bps of Ebitda margin enhancement, and significant improvement in net profits, the company said in an investor presentation. It also brought down its net debt/Ebitda level from 5.6x in FY23 to 2.7x in FY25.

“Over the last couple of years, we’ve very good growth in our patent innovation-related work in the CDMO business, and that has led to giving us operating leverage and an improvement in Ebitda,” Piramal said.

The company expects strong market growth for its India-focused consumer healthcare business, which crossed the ₹1,000 crore revenue milestone this year. “We're also looking at focusing on expanding our distribution from being just a canvas focus in e-commerce, to now broadening to modern trade, quick commerce, stand-alone supermarkets,” Piramal said.

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For its complex hospital generics business, the company intends to leverage its recently commercialised Sevoflurane facility to expand into the rest of world (RoW) markets. Piramal Pharma currently holds 44% market share for Sevoflurane, an inhaled anaesthetic, in the US.

The company expects to expand into other markets inFY26. Sevoflurane has a $400-million global market, Piramal said.

The company posted its financial results for Q4FY25 and FY25 on Wednesday. Its revenue grew 8% year-on-year to ₹2,754 crore in Q4FY25, and 12% in FY25 to ₹9,151 crore, driven primarily by the CDMO business especially from on-patent commercial manufacturing.

Ebitda rose 8% year-on-year to ₹603 crore in Q4FY25 and 15% YoY to ₹1,580 crore in the fiscal year ended 31 March, driven by operating leverage, cost optimization, and operational excellence initiatives, the company said.

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