Pharma businesses with strong quality compliance to emerge stronger as pandemic impact decreases: Ajay Piramal

New Delhi: Pharmaceutical businesses that have a strong track record of quality compliance and can remain agile towards new regulatory requirements, will emerge stronger as the impact of the pandemic decreases, according to Piramal Enterprises Ltd Chairman Ajay G Piramal.

Addressing shareholders in the company's annual report for 2021-22, Piramal said the company's pharma vertical is expected to have nearly 15 per cent CAGR revenue growth across businesses in the medium to long-term.

"In the current circumstances, the pharmaceutical sector has emerged as an essential industry, with an ever-more critical role in today's evolving world," he wrote.

Stating that the world's economy and infrastructure continue to be affected by significant supply chain disruptions and volatility in raw material costs, Piramal said safeguarding the supply chain is extremely critical and the company's teams have been pro-actively working towards diversifying vendor base and obtaining alternative suppliers to reduce supplier/geographical concentration in the last few years.

Stressing that maintaining a strong focus on quality and compliance is another important area of growing significance in the pharma sector, he said, "As the impact of the pandemic decreases, pharma businesses that have a strong track record of quality compliance and can remain agile towards new regulatory requirements, will emerge stronger." As for the company, he said it has been "steadfastly advancing on our journey from 'Quality for Compliance' to 'Quality as a Culture', with a focus on systems, processes, technology, and people".

"Since the beginning of FY2012, we have successfully cleared 36 USFDA inspections, 269 total regulatory inspections and 1,377 customer audits, without receiving any 'Official Action Indicated (OAI)', reflecting our utmost commitment towards excellence in quality and compliance," Piramal said.

Commenting on the role of the pharmaceutical industry, he said it has become even more important because of the ongoing pandemic.

"Pharmaceutical and healthcare firms play a significant role in assuring the accessibility of critical pharmaceuticals while also ensuring the development of novel vaccines and therapies, in a rapidly changing environment. In the current circumstances, the Pharmaceutical sector has emerged as an essential industry, with an ever-more critical role in today's evolving world," he added.

On the outlook of the pharma sector, he said, "We believe that we will continue to deliver in line with our long-term growth track record through organic initiatives. In the medium-to-long term, we expect nearly 15 per cent CAGR revenue growth across the businesses." He further said, "As we grow revenues we expect to improve our operating margins through better fixed cost absorption and therefore also improve our return on capital employed." Post the Carlyle fund-raise for pharma business, he said the company has been investing organically and inorganically across all its pharma businesses.

In October 2020, Carlyle Group had acquired a 20 per cent stake in Piramal Pharma Ltd for Rs 3,523.40 crore.

Commenting on the corporate restructuring of Piramal Enterprises, he said the board had approved the demerger of pharma business and simplification of structure in October 2021, transforming the company "from a multi-sector conglomerate structure into two separate sector-focused listed entities in financial services and pharmaceuticals".

"We are on-track and the demerger is expected to get completed by the Q3 FY 2023, subject to various required approvals," Piramal said.