Piramal Pharma Ltd (NSE: PPLPHARMA) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Gagan Borana — Head Investor Relations & Enterprise Risk Management
Nandini Piramal — Chairperson
Vivek Valsaraj — President & Chief Financial Officer
Peter DeYoung — Chief Executive Officer, Piramal Global Pharma, Piramal Pharma Ltd.
Analysts:
Amey Chalke — Analyst
Sudarshan Agarwal — Analyst
Abdulkader Puranwala — Analyst
Tushar Manudhane — Analyst
Madhav Marda — Analyst
Vinod Jain — Analyst
Alankar Garude — Analyst
Saurabh Kapadia — Analyst
Pravin Rathi — Analyst
Sajal Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 and FY ’25 Earnings Conference Call for Pyramal Pharma Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Gagan. Thank you and over to you, sir.
Gagan Borana — Head Investor Relations & Enterprise Risk Management
Thank you. Thank you,. Good day, everyone. I welcome you all to our post-results earnings conference call to discuss our Q3 and nine months FY ’25 results. Our results material have been uploaded on our website and you may like to download and refer them during our discussion. The discussion today may include some forward-looking statements and these must be viewed in conjunction with the risks our business faces. On the call today, we have with us Mr Piramal, Chairperson Piramal Pharma; Mr Peter, CEO of Global Pharma; and Mr Vivek, CFO of our company. With that, I would like to hand it over to Ms Piramal to share her thoughts.
Nandini Piramal — Chairperson
Good day, everyone, and thank you for joining us on our post-results earnings call. The FY ’25 so-far has been a steady year for the company with revenue growth of 14% and EBITDA growing at about 20% during the nine months. Our CDMO business has been the key driver of this performance with 18% revenue growth along a Y-o-Y EBITDA margin improvement. We have seen robust growth in our revenues from innovation-related work, especially the on-patent commercial manufacturing. In complex Hospital generics business, we’ve seen a healthy uptick in volumes in our inhalation anesthesia portfolio in the US, leading to a 14% revenue growth for the quarter. In the India Consumer Healthcare business, we see the momentum in our Power brands continued with a growth of 19% on the back of continuous investments in marketing and new product launches along with the robust growth in our e-commerce channel. We also maintained our net-debt to EBITDA ratio below 3 times to 2.8 times. On quality and compliance, we maintained our best-in-class quality track-record of successfully clearing 45 US-FDA inspections, 365 total regulatory inspections and 1,800 customer audits since FY 2012. As on-date, we have made zero pending observations at any of our US-FDA inspected sites. This has been made possible due to our strong emphasis on quality as culture with a focus on systems, processes, technology and people. We intend to maintain the track-record going ahead as well. On sustainability, earlier this year, we had received approval from the Science Based Target Initiatives for our commitment to reduce Scope 1 and 2 GHG emissions by 42% and Scope 3 by 25% by FY ’30. During the quarter, we took a significant step to achieving this target by converting the coal-fired steam boiler at our Digwald facility to operate on biomass protets or a carbon-neutral fuel source. This is expected to eliminate approximately 24,000 tonnes of carbon dioxide oxide equivalent greenhouse gas emissions annually, accounting for about 17% of our total emissions. The shift to biomass briquette strengthens our sustainability practices and sets a new industry-standard for environmentally responsible manufacturing. Update on the Board, we’re pleased to welcome back Ms Natalie Leitch as an additional Director, non-executive and non-independent to the Board at Pharma, subject to shareholder approval. Natalie joins us after completing her other professional commitments. She is a subject matter expert in pharmaceuticals and the US generics industry with dominant experience in creative product strategies and formulations. Moving on to business-specific highlights, starting with the CDMO business. Our CDMO business delivered a strong high-teen growth in nine months FY ’25, mainly led by continued traction in our on-patent commercial manufacturing and generic API business. The growth was well complemented by EBITDA margin expansion on the back of operating leverage due to higher utilization at some of our facilities, improved business mix, higher contribution from innovation-related work and differentiated offerings and initiatives towards better procurement strategies, cost optimization and operational excellence. First, we continue to delight our customers through superior execution, best-in-class track-record in quality and compliance and a continuous focus on sustainable operations. This should enhance our chances of getting repeat business and cross-selling different capabilities to our existing customers, thereby leveraging our global network of facilities, having end-to-end capable integrated capabilities across the pharma value chain. And in terms of market outlook for our CDMO industry, while the overall biotech funding has improved over the previous year, it is just enough to replenish the biotech cash burn, but not enough to accelerate R&D spends. With the reduction in global interest rates, we expect the funding environment to further improve and drive order inflows, especially early-stage discovery and development orders., on the order inflows, we continue to experience an increase in customer inquiries and RFPs, driven by the customer needs to diversify the supply-chain. However, the customer decision-making remains prolonged. Amidst our current ongoing regulatory and geopolitical uncertainties, we see cautious optimism for the CDMO industry. To capitalize on this, we’re making regular investments in our capabilities and capacities. Moving on to our complex Hospital business. The complex Hospital generics business registered a 14% revenue growth on the back of a strong volume uptick in our inhalation anesthesia portfolio. In the US market, we renewed and extended some key tenders to maintain our leading market-share in. Also in non-US markets like Asia, Europe and ROW, we saw healthy growth in our inhalation anesthesia portfolio. To further strengthen our presence in the emerging markets, we’ve already undertaken capacity expansion projects in Digwal and Dahead. I’m pleased to share that these expansion projects are progressing and we will be able to capitalize on these commencing the next financial year. The demand for the inhalation anesthesia remains strong with limited competition as top three players command over 90% of market-share in fluorine market in the US and Europe. We will look to leverage our existing relationships in more than 6,000 hospitals and GPOs in around 110 countries to gain more market-share post expansion. In intrathecal therapy, we continue to dominate the US market for with over 70% market-share. Our morphine South product, Mitigo also delivered encouraging sales during the quarter. Our growth in injectable pain management portfolio has remained constrained despite healthy demand due to supply challenges. However, we have started to work with another CDMO partner — CMO partner to strengthen our supplies. Over the new product launches, we have launched a few new injectable products in the US and Europe in the last few quarters. Going-forward, new project launches, especially differentiated and specialty products will play an important role in driving growth in our CHG business. We are making regular investments in developing differentiated and specialty products, which we will market using our existing field force in our relationship with hospitals across the world. Thank you. Moving on to our India Consumer healthcare business. In our ICH business, the momentum continued in the Power brand with strong growth of 19% in the quarter — in nine months ’25. The growth was achieved despite the slowdown in the consumer industry and growth in the being impacted due to it being brought under price control. Excluding IRANE, the power brands have registered a strong growth of 26% for the nine months, which was led by brands like Little, CIR and. To continue this growth momentum, we are making regular investments in marketing and brand promotion activities. Simultaneously, we’re also increasing the availability of our products by expanding our distribution network in smaller towns and exploring new trade channels like quick commerce, super and hypermarkets, et. E-commerce continues to be an important trade channel for us and has shown exceptional growth around 40% in the nine months and continue — contributing to about 20% of our total ICH sales. We are present in over 20 e-commerce channels and our full focus going-forward would be to improve profitability through pricing, product mix and investment optimization. On the new products front, we launched around 14 new products and SKUs this year. Some of the products had delivered encouraging results fueling the overall growth. The performance of during the quarter nine months 20 — FY ’25 have been mostly in-line with expectations of steady growth and EBIT — revenue and EBITDA growth. CDMO continues to grow at a healthy pace with Y-o-Y margin improvement in the back of our innovation-related revenue. CHG business delivered early teen growth led by strong volume growth in inhalation anesthesia. Power brands in our consumer business continue to grow strongly with investments in promotion, distribution and new product launches. We remain committed to our best-in-class quality track-record and set new benchmarks for sustainable operations. And talking about the 4th-quarter, it is historically the strongest quarter for the company, especially the CDMO business and we expect this trend to continue this year as well. We reiterate our guidance for the financial year to deliver early teens growth in revenue and EBITDA with a meaningful improvement in PAT. Further, I’d like to reiterate our FY ’30 aspirations to double our overall revenues to $2 billion with 25% margins and a high-teens ROC. With this, I’d like to open the floor for the Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles to ask questions, please press star and 1. The first question is from Chalke from JM Financial. Please go-ahead.
Amey Chalke
Yeah, thank you for taking my questions and congrats on the margin and good set of numbers. The first question I have is on the CDMO piece. Is it — this quarter we have delivered something like 18% growth. Is it possible to give some color on the growth — how the growth is divided between the development segment as well as the commercial molecules.
Vivek Valsaraj
So Amit, the growth continues to be driven by the commercial side of the business as we reported in the earlier quarters as well, the development of the growth remains subdued as it has been because of the biotech funding crisis and the slowdown in the decision-making with respect to RFPs for the development side. So it continues to remain from the commercial side of the business.
Amey Chalke
So — and considering the biotech environment is improving, do you expect FY ’26 to be better for development or side of the business?
Vivek Valsaraj
A bit too early to say, I right now. We’ll see how things pan-out. We’re not really making any kind of guidance for FY ’26 at this point in time.
Amey Chalke
Sure. Second question I have is we had something like EUR160 million of sales for the patented products in FY ’24. Is it possible to guide for this year where this number could be?
Vivek Valsaraj
The share of the number is going to be towards the end-of-the year when we make our annual declarations on these numbers. We’ve shared what it was in the half year and we’ll give a more specific detail towards the end.
Amey Chalke
Sure. And considering this number will continue to improve looking at our pipeline. You expect overall profitability of the business to move-in tandem?
Vivek Valsaraj
Or so that’s obviously the intent, right? As the overall business improves, the margin expansion should happen in the CMO space as the expansion happens in business revenues.
Amey Chalke
However, will that have any contingency on from where this product is sourced, like if the product is made in US, the profitability, do you expect it to be slightly lower compared to if it is made in India or will that have impact on the scale-up in the commercial side?
Vivek Valsaraj
Am I at-scale the profitability, whether it’s made in India or US are fairly comparable. There is no necessarily a difference between where it is made. So the scale matters.
Amey Chalke
Sure, sure. Thank you so much. I will join back queue.
Vivek Valsaraj
Thank you. Thank you.
Operator
Thank you. The next question is from Sudarshan Agarwal from Axis Capital. Please go-ahead.
Sudarshan Agarwal
Yeah, hi. So my question is in relation to your tax rates. So this quarter also, we had 100% plus kind of effective tax-rate. While I understand there are certain loss-making entities and you know that kind of affects our tax rates, can you elaborate what is driving these high-level of tax rates or is it more that your profitable entities are making more profits and the loss makings are at steady-state? And how should I think about, let’s say, next quarter or maybe the next couple of years in terms of your effective tax-rate?
Vivek Valsaraj
So, you’re right that currently the mix is such that large quantum of profit is coming from the sites where we are currently paying taxes. The effective tax-rate where we pay taxes are aligned with whatever is the tax applicable for the local jurisdiction. In-quarter four, you will see a meaningful reduction in the effective tax-rate. As we mentioned, quarter-four is the biggest quarter in absolute value, which means the profitability at several of the other sites also improves, leading to a reduction in the overall effective tax-rate. So yes, you will see that reduction. We are not guiding for tax rates of the future years. We’ll see that later when we make specific guidances on years beyond FY ’25.
Sudarshan Agarwal
Okay. Thanks for that. And lastly, I think you had certain one-off expenses in the health hospital generic space that you had called out earlier. Was a large chunk of it spent in this Q3 or is it pending? How should I think about that particular spend?
Vivek Valsaraj
We’ve spent about half of it,, we still expect the remaining to happen in-quarter four.
Sudarshan Agarwal
Okay. Okay. Thanks. Thanks. That’s it from my side. Thank you thank you.
Operator
Thank you. The next question is from Puranwala from ICICI Securities. Please go-ahead.
Abdulkader Puranwala
Yeah, hi. Thank you for the opportunity and congrats on good set of numbers. My first question is with in relation with your cost optimization measures, while a good amount of that was visible into this particular quarter. But if you could highlight a couple of strategic initiatives what you are taking and kind of the kind of impact that will be seen in your EBITDA margins ahead would be helpful. Thank you.
Peter DeYoung
So I can handle this one. Sorry, the — and then you can add-on top of that. For our cost efforts, we have several dimensions of activity there across the whole company. The first one is we’re now into, I think, the third year of our significant enhancements in our procurement efforts, which should continue and have demonstrated improvements in our purchased goods on both direct and indirect. The second one is that we’re also several years into a very aggressive program on our operational effectiveness program, which is covering both direct and indirect labor as well as all the materials and how we use them in our facilities. And we’re seeing significant benefits from those efforts. And I think those two initiatives are providing us with both separately and together significant improvements in our overall cost-to-serve across our network. I think those are the two I’d like to highlight and I think that they have contributed to some of our benefits this year so-far and we aren’t done with those journeys yet. We should see benefits in the future months and quarters. And Vivek, if you want to add anything, please?
Vivek Valsaraj
I think we probably covered that.
Abdulkader Puranwala
Got it. Thank you. And my second question is pertaining to the new contracts, what you have gained in the complex hospital generics, and firstly on what would be the tenure of this contract? And last — secondly, if we see the growth acceleration which is happening in this particular quarter, how much of that is because of this new contract?
Peter DeYoung
This one, I would say that some of the contracts were renewals of existing contracts, which is very positive because they’re — in those cases, they are multiyear renewals, which is very beneficial for stability of revenue, but that doesn’t demonstrate the growth. Then we do have certain ex-US contracts that were new. And I would say that they are going to provide benefits in future months and quarters, but I would look at the overall annual growth and the annual guidance we’ve given as opposed to within quarter variations that there can be anomalies and differences the prior year comparable quarter or also within the quarter. And so I would encourage you to look at our overall guidance for the business for the year in the full-year basis because that’s probably the better measure. But I think you rightly noted that we are seeing kind of a return to healthier growth in this business and we expect to kind of see that continue as in-line with our long-range plan.
Abdulkader Puranwala
Got it. Thank you. And I’ll get back-in the queue. Thank you. Thank you.
Operator
Thank you. The next question is from Tushar from Motilal Oswal Financial Services. Please go-ahead.
Tushar Manudhane
Thanks for the opportunity, sir. Sir, with respect to biotech funding, while there is some gradual improvement, but apart from our — let’s say, the interest-rate, what is it that is holding on in terms of the increase in the biotech funding, is the projects itself running at a slower pace or is it only to do with the finance cost? That is my first question.
Peter DeYoung
This is a complicated topic to predict the future. What we are looking at is the ability — first of all, last year, as mentioned in her opening comments that last year, the aggregate funding increased over the prior year, but not beyond the level of replacement. And so our expectation is that if the funding were to improve further beyond that, it would need to be driven by some combination of factors. One could be the reduced interest-rate. The second could be the recycling of capital through exits through M&A because of changes in the FTC policy in the US that could allow for more exits and then therefore more recycling of capital into the industry. Another driver of potential increased investment would be more clarity around the viability of new investments with clarity around who is going to be in the cabinet and what policies they’re going to take. And all of these things need to be kind of shaken out over the coming weeks and months. But we were, as mentioned, cautiously optimistic about the future because of some of the signals we saw of the increased deal activity at JPMorgan, the increased I guess, overall move-in sentiment in that event. And if you look at the queue of pending IPOs at the moment, which are not yet fructified in the US, but if they were to come up, the number in the queue would be a substantial increase over the same prior-period last year. So it’s a combination of effects that have not yet played out and so therefore, we’re watching them very eagerly to see in which way they turn.
Tushar Manudhane
Got you because the commentary is a kind of optimism which in general we had from the CMO companies, it seems to be sort of moderating in terms of the outlook and that’s the reason to ask this question. Secondly, if you could just also
Nandini Piramal
Increase — there’s increased volatility and uncertainty. So I think everyone is including us is being cautious.
Tushar Manudhane
Secondly, just if you could also share the gross margin across these three segments, if not exact — probably in the packing for each of the businesses?
Vivek Valsaraj
We don’t share a individual vertical level gross margins, Pushar. But they are not materially different except for ICH, which obviously will be slightly lower, but otherwise not materially different. And
Tushar Manudhane
Understood. That’s just from me, sir. Thank you.
Operator
Thank you. The next question is from Madhav from FIL
Madhav Marda
Hi, good evening. My first question was, what is the one-off cost that we booked in-quarter three for the CIG renewal?
Vivek Valsaraj
Sorry, if you could please repeat your question.
Madhav Marda
What is this one-off cost which we booked in-quarter three? Could you quantify that amount?
Vivek Valsaraj
As I said, it’s about $4 million, half of what we had planned to. It’s not completely booked in-quarter three. So between H1 and quarter three, quarter three has about two, H1 at about 2 million.
Madhav Marda
So $2 million, so let’s say, 15 16 shows. So should we say that the normalized business profitability in-quarter three is higher by $2 million, that’s how we should look at the sort of steady-state margin for the business?
Vivek Valsaraj
Yes, because this is a one-off spend for quarter three. That’s right.
Madhav Marda
Okay. Got it. And the second question was on the CAG business. Sorry, very basic question, but has the new site for inhalation started, which we wanted to use for servicing the ROW markets? Has that already commissioned or when does that start?
Peter DeYoung
So to clarify on this one, the facility — addition of capability at our Digwell facility forcebo fluorine, the facility has been completed, the product has been manufactured and it’s on stability. And so as that stability data matures and we can start to file in different markets, we would start to enjoy the benefits once those are filed and the benefits accrue. And so that’s why mentioned in her comments that this would be a next fiscal year benefit that we would experience in a phased manner. And in the case of the hedge facility, the work is progressing such that we should allow it to see the benefits also in the course of next fiscal year and that has a lower regulatory hurdle. And so it’s in-progress, but not yet there and no major issues at the moment and expected benefit next fiscal year.
Madhav Marda
Understood. Thank you so much. Thank you very much.
Operator
Thank. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Jain from WF Advisors. Please go-ahead, please go-ahead.
Vinod Jain
Good evening, everybody. My question relates to the two dynamic parameters of the skewed nature of the business in the financial year and the tax incidents to the company. We can see the profitability remains precarious and for the first-nine months, there is a loss, right? It is only the last quarter which is delivering value to the organization as it appears. I have pointed this earlier that there has to be an affort to even out the business over the quarter to make the profitability higher and sustainable for the company. And secondly, the tax incident from the company also requires some — the organization collapse of the business to in favor of the — or in favor of the company — of the brands which are delivering higher profitability.
Vivek Valsaraj
So, sorry, your question was not very fully clear. One I understood was your question was related to the skew of profitability. Am I correct? Am I correct?
Vinod Jain
Yes.
Vivek Valsaraj
If you could please repeat your second question, your second question.
Vinod Jain
The second is the incidence of taxation, which remains on the higher side. Can we reorganize the businesses in such a way that the operations of the higher profitable plants are increased and the loss-making plants operations are well used to make the overall incidence of the taxation at a lower level.
Vivek Valsaraj
Yeah. So the question is. Firstly, of course, it is a preferred thing that we should have a more even distribution. We would also prefer that as management to have more even distribution of revenues and profitability. This queue is predominantly enough CDMO business and the reason this also happens is because of the way the customers place orders with us and when they expect delivery. So it’s not completely within our control. To the extent possible, we of course try to push the skew, but we’ve seen this historically that the customers tend to buy more in their first-quarter, which is our last quarter and that trend has continued. Secondly, with respect to the taxation, rest assured that we don’t pay tax higher than what is required in the jurisdictions where we operate. So we are paying only the standard ATR, whatever it is, 24% 25% that is there. Currently, of course, it looks skewed because of the subscale operations at some of our facilities. As we increase our overall utilization and as profitability improves, the ATR will also start showing an improvement. So it’s more about improving the overall business performance to be able to get a more optimized tax optimize that.
Vinod Jain
But sir, as a general person, I would like to understand the subsidiaries and the elective subsidiaries happen throughout the year, why would the business have such a huge skew towards the last quarter of the year?
Vivek Valsaraj
Yeah. So essentially, Vinas, there is a component of fixed-cost that prevails throughout every quarter, right? So as the scale — it’s all about fixed-cost leverage, as scale improves, as revenue booking enhances, margins improve. So it’s more about fixed-cost leverage.
Vinod Jain
Very well. Thank you. Thank you.
Operator
Thank you. The next question is from Alankar Garude from Kotak Institutional Equities. Please go-ahead.
Alankar Garude
Hi, thank you for the opportunity. Vivek, you spoke about growth being driven by the commercial segment within CDMO. So in that context, can you provide some qualitative comments on the improvement in utilization rates, particularly at our overseas facilities in this quarter?.
Vivek Valsaraj
So, see, it’s difficult to give a number of utilization and we’ve been saying this that putting one number across all the facilities that we have, given the fact that it’s development commercial, it’s very complicated and it probably would be not making sense if I throw a number. Obviously, as we improve scale, we are looking for improving the utilization, that’s the target. But I really can’t give a number for that. And especially at a quarter level, it’s even more difficult.
Alankar Garude
Yeah, yeah. So that’s why my question was, any qualitative comments would be helpful. Thank you.
Vivek Valsaraj
So it’s — historically, as we’ve been saying that our utilization at our facilities in India are high and at the same time at some of our API facilities are also on the higher side. We do have more capacities on the formulation side of the business. And we have created some capacities in the form of capexes at our facilities, whether it’s ADC, whether it’s that high potent API. So those are recently created capacities where we continue to have some capacity right now.
Alankar Garude
Understood. Secondly, while it would be difficult to make a like-for-like comparison, intuitively, how should we think about the margin profile for integrated projects versus, say, a single facility-based project?
Vivek Valsaraj
The integrated projects allow you to capture a higher segment of the total of value chain, right, because you are actually getting profit from multiple areas within the entire profile of the product. So to that way in absolute value, it will be much more higher than doing just one part of the work for the customer yeah.
Peter DeYoung
You see — just to build-on this, we see the margin may be modestly similar or better, but I think the much more important thing is what Vivek alluded to, which is the average ticket size for an integrated program is in order of magnitude higher than for a standalone offering on a like-to-like basis. And so — and I think the other point is that when we deliver on our customer promises after winning an integrated program, we find that the business is also stickier. And so we see the benefits primarily in the windy windows and we do win them and we’re excited about this offering is that we can get a single win can have a larger ticket size and it’s more durable when we perform.
Vivek Valsaraj
Got it. And one last question if I may. While that would not be visible as of now, but is there any possibility of slowdown in the RFP activity given the uncertainty around the Biosecure Act?
Nandini Piramal
And sir, one is, I can want to take this. The Biosecure Act has not been passed yet, but you know, if people are looking at diversifying of supply chains, we do have capacity available in the US for US manufacturer. And I think that’s one of the benefits of our global structure, right? As well as capacity in India. So if people want to diversify, we do have the capacity available.
Alankar Garude
Understood. That’s it from my side. Thank you.
Operator
Thank you. The next question is from Saurab Kaparia from Mutual Fund. Please go-ahead.
Saurabh Kapadia
Thanks for the opportunity. While our, EBITDA margin has seen improvement on Y-on-Y basis also on — versus Q2, but the gross margin has — has seen some softness. What could be the reason for that?
Vivek Valsaraj
So Saurabh, I would urge, don’t look at quarterly gross margins because they can move depending upon the product mix during the quarter. The Nine-Month gross margin is more representative. As we’ve been saying, overall gross margins of, 64%, 65 is more representative and that’s how it will pan-out. Out. So within a quarter, you will see some skews depending upon the mix.
Saurabh Kapadia
Okay. And also in CDMO, if you look at nine months growth of 18%, can you at least give some color in terms of how has been the growth in the API business, generic API business?
Vivek Valsaraj
So while we don’t give specific growth at a individual segment level, overall, it’s been a healthy growth I may says
Peter DeYoung
Yeah, I’d just add that we’ve seen some kind of a return to growth in a healthy way that describes for our generic API segment after a few years where it was more volatile and less positive so I’d say this is actually something that we see positive time
Saurabh Kapadia
Thank you.
Operator
Thank you. The next question is from Praveen Rathi from Praveen Rathi and Associates. Please go-ahead.
Pravin Rathi
Congratulations on good set of numbers. I have two questions. Any color on our production of under the brand-name of and the second one is that government is actively considering this investment of ethanol life care soon. So are we actively considering to participate in that? Thank you.
Vivek Valsaraj
Can you repeat your second question? We didn’t understand a second question.
Pravin Rathi
Our government is considering the of HRL Lifecare, right? And we are shortlisted, I think in that. So are we actively pursuing for that or due to the leverage thing, we will not consider it?
Nandini Piramal
I think we’re not looking at any new acquisitions at the moment. I mean, that answers the question.
Pravin Rathi
Okay. And the first one?
Vivek Valsaraj
We can’t comment on specific products. We are bound by confidentiality agreements, Praveen, so please excuse it may not be appropriate for us to make comments on that.
Operator
Thank you. Before we the next question is from Chandraj who is an individual investor. Please go-ahead. Mr there seems to be no response from the line of. We’ll move to the next question. The next question is from Sajal Kapoor from Anti-Fragile Thinking. Please go-ahead.
Sajal Kapoor
Yeah, hi, many thanks for taking my questions. The intermediate and API supply-chain, we know that is spread across the globe and it’s pretty complex. So given the recent posturing from the US administration, I mean, how is the economics and the timeline of setting up a greenfield facility in the US versus India?
Peter DeYoung
So we’re not currently contemplating setting up the greenfield API facility in the US we actually have an existing facility that has capacity for the type of offering that we think would be most benefiting from onshore production, which would be the on-patent work and the higher-value work. I think there’s a lot of uncertainty that needs to play-out given the recent political indications. But point is the one that I think we should just emphasize, which is that if the customers should feel the need to produce more onshore in the US. We have capacities available now at our facilities if they should feel the need to do that in the areas where the value would be highest because of the benefits of the offerings we have. If the US wanted to do a much more wholesale, including the lower-value products and the higher-volume products, it would be a much more substantial change. And I’m not entirely sure there would be ability to execute on that in the near-term and there would be more things that would have to play-out. And so we’re just going to have to wait-and-see how the government acts and also how our customers act. But our point is, if you want capacity at the appropriate value, we have it in both the US, which is the onshore offering and we also have it in Frenchoring countries such as India and Canada and the UK. And so this will have to play-out over-time and frankly, it’s too much volatility to make a prediction. But our point is we’re ready for our customers.
Sajal Kapoor
Yeah. And Peter, the pricing is different, right? If you want the product to be made in the US and the pricing will not be same as in India, right?
Peter DeYoung
We see actually customers when they make a choice of who is going to provide for them, typically they will pick the country and then they will do an RFP with people who can provide in that country and the pricing is compared against other providers in that country. While sometimes more infrequently customers will do global RFCs, we found that in many cases they will pick a country or a couple of countries where they’re willing to resource from and the competition is based on the cost structure of the location.
Sajal Kapoor
Yeah, no, understood. And in terms of the duration and the scope of the compliance audit, how does the USFD audit and differ from a customer audit because logically speaking, failure to meet compliance obligation is a risk for our customers. So their audit should be stricter, longer and I mean, ideally, they should go deeper compared to a USFD audit because if we fail a pass, I mean, it doesn’t impact the cash-flow of USFDA, but it does impact the cash-flow of our customers.
Nandini Piramal
I think our customers are very experienced auditors. And often what they do is they do help us improve and get to the level that the US-FDA inspects. That’s one of the benefits of being a CDMO is that you have a lot of customers that walk-through to the plants and more eyes will always find — you’ll always learn something. Different customers do have different approaches to the audit, so you also learn from each of those and you have to then decide what is a way of quality.
Sajal Kapoor
That’s helpful,. And finally, if I may squeeze the last one. And how many CDMO scientists do we have and so that’s one part. And then do our scientists work across multiple projects simultaneously or do they remain restricted to one team, one project at a time.
Peter DeYoung
I’ll take this. So we have a teaming concept for a given project and obviously as the work progresses through the value chain, different cross-functional members participate in that activity. And so in many cases, people would be working on that activity at that point in time for that client. But it’s rare that the entire team would be dedicated unless it’s a larger volume commercial recurring activity where we can car people out or if in the case of the — if a client wants to have a dedicated team and they’re willing to pay the FTE rates for a kind of a certain period of time. And so it’s — the more common arrangement is that people pay us for the outcome and rearrange the team to deliver that outcome. And — but there are cases where people will say, I want to line-up lab unit in the case of, let’s say, discovery or if they would like to ring-fence a set of people to make sure that they’re available even if there will be variances in the utilization of the people. That’s typically a maybe a higher-cost option because it doesn’t allow them to get the benefit of the ups and downs and they have to pay throughout. So I’d say that’s done, but it’s more frequently, they pay us for the outcome and we deliver the service.
Sajal Kapoor
That’s helpful, Peter. I missed the number of CDMO scientists we have today and where do you expect this number to go in the next foreseeable future.
Peter DeYoung
So we haven’t disclosed that in the past. I guess we haven’t gotten that question too often. What we could do is debate whether that’s something we put in our next annual disclosure. It’s — what we’ve actually focused on is what we call our scientific collective, which will be kind of our highest caliber scientists that we think are very helpful in the selling process and also the execution projects — process of projects. And projecting these very-high profile top of their domain experts we found has been a very useful tool in giving perspective and current clients comfort that we can add value to their projects and not just execute without having that perspective. And so we’ve invested in what — and we’ve even branded it from a marketing perspective as the scientific collective. But this would be a handful of very high-profile scientists. Obviously, there’s a whole large number of folks behind them that are highly-skilled, but we don’t market or brand them that way. But we take your feedback, we’ll think about how to best capture that in the future.
Sajal Kapoor
Thank you, Peter. Thank you. That’s all from my side. Thank you.
Operator
Thank you very much. That was the last question in queue. I would now like to hand the conference back to Mr Gagan Barana for closing comments.
Gagan Borana
Thank you very much everyone. We hope that we are able to answer most of your question. In case you have any follow-up questions or any clarification, please feel free-to reach-out to me and I’ll be happy to respond. Thank you and have a good day.
Operator
Thank you very much. On behalf of Piramal Pharma Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen, you may now disconnect your lines.