Most of the contract drug manufacturing organisations (CDMO) in India have witnessed a disappointing third quarter in the current financial year due to multiple factors including rising input costs and price pressure in key markets like the United States. The December quarter results for many leading pharma companies in the DCMO segment have not been encouraging.
The CDMO players, engaged in manufacturing drugs for big pharma, biotech or generic pharma companies may face a challenging 2023 as productivity could be impacted due to global factors as well as some operational issues.
Since there is either inflationary pressure or a downward trend in major economies and developing countries the price pressure could further increase for the DCMO players, according to market observers.
Market watchers estimate CDMO business to decline in FY24 due to the high base of FY23E. The pharma stocks are in correction mode from their 52-week highs.
Third-quarter results of leading pharma companies have been disappointing. For instance, Piramal Pharma’s EBITDA fell by 5 percent to Rs 170 crore.
Laurus Labs’ EBITDA margin also missed Street forecasts of 28 percent and was also the lowest since the March quarter of the previous financial year.
However, Laurus’ CDMO and API business saw sustained growth, led by commercial supplies and from the execution of new projects. The pipeline also looks encouraging, according to the company, with over 60 active projects.
