Piramal Pharma Points to Early Recovery Signs After Seeing Red in Q3
Piramal Pharma Ltd has reported a challenging third quarter for fiscal year 2026, with revenue declining and the company slipping into a loss. However, management is pointing to early signs of recovery in its contract manufacturing business, offering a glimmer of hope for the future.
Q3 Financial Performance: Revenue Dip and Loss
The company posted its results for the third quarter of FY26 late on Wednesday evening. Revenue dipped 3% year-on-year to ₹2,140 crore. More significantly, the company slipped to a loss of ₹136 crore from a net profit of ₹4 crore in the same quarter of the previous fiscal year, Q3FY25.
Its EBITDA margin also contracted substantially, shrinking from 16% in Q3FY25 to 11% in the reporting quarter. This performance indicates the ongoing pressures faced by the pharmaceutical firm in the current fiscal environment.
Early Signs of Recovery in Contract Manufacturing
Despite the quarterly setback, Piramal Pharma is beginning to see early indicators of a turnaround in its contract development and manufacturing organization (CDMO) business. Chairperson Nandini Piramal expressed cautious optimism at a press conference on Thursday.
"We are seeing early signs of recovery. We've seen a pickup in RFPs (requests for proposal) and order inflows, and we're not changing our FY26 guidance," Piramal stated. This recovery is attributed to improved biopharma funding and increased dealmaking activity in the United States, which are starting to positively impact order flows.
Challenges in the CDMO Business Segment
The company's performance this fiscal year has been significantly bogged down by its CDMO business, which is its largest growth driver. Revenue from this segment fell 9% year-on-year to ₹1,166 crore in Q3.
This decline was primarily due to inventory destocking in one of its large on-patent commercial products, coupled with slow order flows earlier in the year. Piramal noted that while internal RFP activity is increasing, the conversion to firm orders typically takes about six months, indicating that the financial benefits of this recovery may materialize with a lag.
Strategic Acquisition and Business Diversification
In a strategic move to bolster its portfolio and derisk the business, Piramal Pharma announced on Wednesday the acquisition of Kenalog, a commercial injectable product from Bristol Myers Squibb. The deal involves an upfront consideration of $35 million, with contingent consideration of up to $65 million.
"We expect annualized sales of $30-40 million," said Piramal. "It is a product that has limited competition and we expect that it will add incremental revenue without a lot of incremental cost to the business. It is a complex and hard-to-manufacture product."
This acquisition is part of the company's broader strategy to develop its own licensing capabilities and acquire products to broaden its customer and product base. The product is expected to strengthen Piramal's complex hospital generics business, which grew modestly by 2% to ₹668 crore in Q3FY26.
Bright Spot: Consumer Healthcare Business
Amid the challenges in other segments, Piramal Pharma's consumer healthcare business emerged as a strong performer during the quarter. This division saw robust growth of 20% year-on-year, reaching ₹334 crore. This growth highlights the resilience and demand in the over-the-counter and consumer health product markets.
Outlook and Market Reaction
The company had earlier guided for mid-single digit revenue growth with EBITDA margin for FY26 pegged in the high teens. While acknowledging that year-on-year comparisons will be difficult in Q4—historically its strongest quarter—due to large product sales in the same period last year, Piramal expressed optimism about sequential growth.
With the company reaffirming its full-year earnings guidance, investor sentiment appeared positive. Piramal Pharma's stock price was up 3.7% at ₹159.70 in afternoon trading on the National Stock Exchange, reflecting market confidence in the early recovery narrative and the company's strategic initiatives.
The pharmaceutical firm continues to focus on building scale, broadening its product portfolio, and expanding its customer base to create a more resilient business model capable of weathering industry cycles and capitalizing on emerging opportunities in the global healthcare market.
