US CDMO business seeing softening, says Piramal Pharma Chairperson

US biotech funding slowdown hits Piramal's CDMO business as company expands sterile injectables facility and maintains long-term growth targets

Piramal Pharma, which is eyeing a $2 billion top line by 2029-2030 (FY30), has seen a slight softening in the contract development and manufacturing organisation (CDMO) business in the US due to various factors like slowdown in funding for early-stage biotech projects.

 

The company had set a target to double its CDMO revenues to $1.2 billion by FY30, implying early-to-mid teens CAGR revenue growth over the next five years. CAGR stands for compound annual growth rate. In the first quarter of the current financial year (Q1FY26), the CDMO revenues fell 6 per cent year-on-year (Y-o-Y) to Rs 997 crore. Barring the impact of de-stocking in one large on-patent commercial product, the base business has seen mid-teens growth.

 

Speaking to Business Standard, Piramal Pharma Chairperson Nandini Piramal said: “For the overall CDMO business, the US demand is a bit soft, mostly because funding in the emerging biotech sector has been soft. This is dependent on domestic US factors such as interest rates, mergers & acquisitions (M&A), initial public offerings (IPOs), etc. It’s got more to do with what’s happening at the Food and Drug Administration (FDA) rather than tariffs.”

 

US analysts have said that biotech firms and their boards and investors are now seeking clarity on FDA regulation, drug pricing, and funding before committing to large and long-term investments. This is because product development cycles in this space can range 12-15 years. Biotech startups are thus under intense pressure to align valuations, and this is making securing funding a rather uphill task. Piramal said: “Hopefully, as the year goes on, people will get more confidence.”

 

Meanwhile, Piramal Pharma has started work on expanding its sterile injectable drug products facility at Lexington in the US. “This should lend impetus to our integrated antibody drug conjugate (ADC) development and manufacturing programme over the medium-to-long term,” the company said. ADCs are a kind of cancer therapy designed to deliver chemotherapy directly to cells. This is a growing field in cancer treatment.

 

Piramal explained: “There is a lot of demand for fill-and-finish products in the US onshore, and we had some customers whose products kind of graduated from the facility (Lexington) to somewhere else because we did not have the space or the capacity to do it. We are now adding around 24,000 square feet (sq ft) of manufacturing space as well as a new laboratory, and the expansion will be completed by 2027. This is for high-potent sterile fill-and-finish products.”

 

The company has 15 global CDMO facilities, with four in North America, two in the UK, and nine in India.

 

Piramal Pharma posted 1 per cent year-on-year (Y-o-Y) decline in its Q1FY26 revenue at Rs 1,934 crore, missing the Bloomberg estimate of Rs 2,047 crore. The stock fell in morning trade after the results were announced late on Monday night. It, however, recovered to end the day’s trade at Rs 206.4, up marginally.