US drugmakers have begun reaching out to explore contract manufacturing possibilities to Piramal Pharma Ltd. as they gear up for the proposed Biosecure Act that would blacklist Chinese biotech companies and their American units.
The Mumbai based firm — one of the expected beneficiaries of the US legislation which was passed by the US House earlier this month —- is already seeing an increase in request for proposals this year for its contract drug manufacturing business, Nandini Piramal, chairperson for Piramal Pharma said in a media briefing in Mumbai on Wednesday.
“Anyone who is understanding this market and playing in it, they have to give their board or their management a strategy of what happens if it passes,” she said, referring to American drugmakers who are mapping out ways to diversify their supply chain and cut reliance on Chinese suppliers.
Investors are betting on contract manufacturers in India, Japan and South Korea to seize the opportunity, which generates billions of dollars in revenue each year. Shares of Piramal pharma have surged 63% this year, beating the benchmark Nifty 50 index.
Piramal added that business deals haven’t been signed yet. “The sales cycle is long,” she said. “It takes time for people to decide and it costs money to move projects.”
Strong Support
The bill, that is now awaiting approval from the US Senate, would force pharmaceutical companies to seek out new partners after 2032. Before the House passed it on Sept. 9, Bloomberg Intelligence gave the biosecurity bill a 70% chance of becoming law given strong support among lawmakers.
“Availability of high-quality talent and relatively low costs also make India a potential choice of destination” for contract drug manufacturing, HDFC Mutual Fund said in an Aug. 27 note.
Although requests for proposals have surged since March, the benefits of the act would “trickle” slowly for the company that gets over 40% of its revenue from North America, Piramal said. She added that the global biotech sector was receiving more funding and that was another reason for the rising number of inquires for contract manufacturing.
The Mumbai-based firm, which makes complex hospital generics such as anesthesia, has 17 manufacturing units across the world, aims to have a revenue of over $2 billion firm by 2030, it said in its investor presentation.
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