We won't make an acquisition just because we have to: Piramal Pharma chief

In a Q&A, Nandini Piramal, chairperson of the firm, says the company currently sees great scope in expanding and organically growing the OTC business, and wants to build more consumer focused brands

Piramal Pharma (PPL) listed on the Indian stock exchanges on Wednesday. In October 2021, the board of Piramal Enterprises had approved the demerger of the pharmaceutical business and simplification of the corporate structure. In an interview with Sohini Das, PPL chairperson Nandini Piramal outlines her future plans for the pharma entity. Edited excerpts.

How will the demerger unlock value? Has any more restructuring been planned?

Investors, shareholders were saying that it’s very difficult to understand both financial services and pharmaceuticals. The risk-reward understanding for those folks was getting very difficult. In 2020, we raised money from Carlyle and that put us on the path of demerging. It (the demerger) will make it clearer for each company about the business, make the understanding easier, and also communicate with stakeholders – regulators or shareholders – that it’s easier to do so.

You have spoken about increasing presence in the Indian domestic market through generic drugs and are open to acquisitions. What is the update there?

We really like our consumer products division--we are one of the OTC largest in India. We are focusing on getting scale there. We have seen great growth. Valuations across the board have been high the past few years (for acquiring). We have been much disciplined that way; we won’t do an acquisition only because we have to. It has to fit in with our strategy, and also with the value. If the valuations change, then we will look at it. But, right now we are seeing a lot of benefits in expanding and organically growing our OTC business. We want to build brands that are more consumer focused.

India consumer health business had a revenue CAGR of 15 per cent between FY17 and FY22. What are the plans to grow the power brands portfolio here?

The growth is coming from a low base, so the percentages and numbers look great. We want to invest in it. We are running it on breakeven. Once you have the distribution in place, the consumer knowledge, then one advertising campaign will do great on a larger base. We are investing a lot in advertising – Little’s brand has Kareena Kapoor, advertising for Lacto Calamine brand.

We are investing in advertising and also on launches, broadening the range etc. We have had 12 new launches so far this year. We will continue to make launches especially in the baby care and women’s range.

Pharma companies are warming up to cosmetic dermatology. Any plans to enter?

We have added a whole range of products to the Lacto Calamine brand – face wash to masks to lotions etc. We are going to go into doctor prescription, but would look at the consumer part of the business.

The CDMO business is facing some headwinds. Complex hospital generics too had pressure under Covid-19. What is the outlook?

We are not worried about demand. Volatility in the form of exchange rates is a challenge in the short term, but eventually, it will ease out.

During Covid-19, everyone was focusing on the pandemic and nothing else. The hospital beds were full of Covid-19 patients. But Covid hospitalisations are coming down. I am quite confident about that business.

PPL recently made some acquisitions like Hemmo Pharma. How does that bolster top line and bottom line growth?

Since 2020, when we raised money from Carlyle, we have made two acquisitions in the pharma solutions space – one was a site in the US, the other was Hemmo Pharma in Turbhe. We also did one in the critical care vertical. We remain excited about them. We are pretty much on track to meet our targets. If you look at Hemmo, we bought the adjacent land, and we plan to amalgamate the plots to build a second unit there to increase capacity. The acquisitions are already contributing to topline and bottomline.

Any investment plans in manufacturing for FY23?

In the next 18-24 months we will spend about Rs 1,200 crore on brownfield capex. This would be both in India and overseas. We've seen a lot of demand in the US and Scotland, and that’s where we have some capabilities like antibody blood conjugates etc. that are wanted by our customers. We plan to expand these capacities.

What would you like to tell your shareholders about Piramal Pharma's prospects in the next 3-5 years?

At the outset, I'd say we are looking at 15 per cent organic growth, as well as margin improvements in the 3-5-year horizon. We will continue to look for potential targets in pharma solutions, in brands and in generics.