"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."
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 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. There is an 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?
When it comes to gene therapy, India is still early in its journey of developing expertise. We are happy to be associated with one of the leading start-ups focused here, Yapan Bio, a CDMO providing expertise in biologics and vaccines located in Genome Valley in Telangana that we invested in at the end of 2021.
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 service 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. If it were to include the industry, this would support exports, regardless of whether they are products or services, and this would be highly beneficial to any pharmaceutical company doing innovative work and help India's overall import-export objectives.
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 India. 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 for 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.