Can you share some recent updates of Piramal Pharma’s operations?

Perhaps most obviously, we demerged Piramal Pharma from Piramal Group because we felt it would allow us to better align our patients, employees, and investors. We successfully concluded the demerger in October 2022, with Piramal Pharma Limited now listed on the two main Indian stock exchanges, BSE and NSE. In terms of inorganic growth, the company added a drug product facility in the US, a peptide capability in Navi Mumbai, and a minority investment in a gene therapy and vaccine development company in Hyderabad. On the organic side, Piramal has conducted or is currently working on expansions at its facilities in Canada, Scotland, and the US. In India, we are expanding both the peptide facility and the gene therapy facility. We are also in the process of expanding our API facility in Telangana.

What led to your company’s acquisition of Hemmo Pharmaceuticals?

We observed that many of our customers were doing small molecule work and investing in this category of drug substance, which was not previously a focus area for us. We added Hemmo because they provided us with the ability to do development work for on-patent clients working with peptides. The company already had an established on-market generic portfolio and a pipeline of generics, meaning we can serve both the services segment and the generics segment for peptides, an area we believe is attractive and growing. Per our estimates, there are over 80 approved peptides in the market in the US, around 250 under clinical development, and about 500 in preclinical development. Piramal only has to serve a small fraction of this peptide work to be relevant, and there is significant room for growth. In fact, we see the space growing at roughly 5-8% per year, and of that, two thirds is outsourced. As such, there is opportunity to grow a meaningful clinical development pipeline with our services business on top of the existing generic business Hemmo was already doing.

How do you see gene therapy and other capital-intensive innovative medical approaches taking root in India?

India is still stronger in more established chemistry areas rather than emerging areas. When it comes to assisting the transition to more capital-intensive innovations, the government has put effort into the PLI scheme. This is an important gesture towards aligning industrial policy, but it is more geared towards products than services. It would be beneficial for them to open a category of criteria to allow services or CDMOs to also benefit, which would help companies like Piramal augment their abilities as services providers to innovators, regardless of whether they are domicile. Additionally, the RoDTEP scheme (Remission of Duties and Taxes on Exported Products), initiated in early 2021, currently excludes pharma.

To what extent is ‘Make in India’ possible?

There are three strong trends happening simultaneously. First, there is a reshoring trend within most major economies, including in India. We are seeing in each location a combination of government and corporate initiatives to take steps to reduce reliance on other nations for many parts of their goods supply chains. Second, I see a fiscal discipline trend. Governments have been running massive stimuli for long periods of time. At some point, they will have to sort out balancing their budgets, and they will not be able to pay for more public services, which may be in direct opposition to their reshoring efforts. This will have to be grappled with in a world of high inflation. Right now, we still see more of a willingness to deal with this later, but the Inflation Reduction Act in the US is an example of where there will be pricing impacts on pharmaceuticals. Governments will have to grapple with this question: Is it better to be made domestically or to have the lower price?

Third, the strategy of China-Plus-One is gaining popularity. Many companies used to rely heavily on China given their focus on cost to the exclusion of other priorities. Several of these companies have realized the need to include India as a second option to products they used to make in China to increase resilience.

We are dealing with all three trends at the same time. I believe India will benefit from the fiscal pressures alongside the China-Plus-One pressures, and I see Piramal's US, Canadian, and UK facilities benefitting from the reshoring trends. This is why our company is focused on remaining geographically agnostic and customer- and patient-centric.