Divi's Laboratories Limited, one of India’s leading pharmaceutical manufacturing companies, has entered into a long-term manufacturing and supply agreement with a global pharmaceutical company. The agreement is aimed at the manufacture and supply of advanced intermediates for the partner on a sustained basis.

In an official regulatory filing dated 24 May 2025, the company informed both the National Stock Exchange of India Limited and BSE Limited about this significant agreement under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Although the name of the global partner remains confidential due to the non-disclosure agreement signed between the parties, Divi's has indicated that the contract represents a meaningful revenue opportunity for the company. The deal is international in nature, further emphasising Divi’s growing role in global pharmaceutical supply chains.

As per the communication, the scope of the agreement includes the manufacture and supply of advanced pharmaceutical intermediates. These intermediates are key chemical compounds used in the production of active pharmaceutical ingredients (APIs) and finished dosage forms.

The agreement is structured such that Divi’s will invest approximately Rs 650 to 750 crore in capacity expansion to fulfil the manufacturing requirements under this deal. This investment is expected to be funded by capacity reservation advances which will be paid by the global customer in a phased manner.

The company confirmed that this transaction does not fall under related party transactions, and no promoter or group company interest is involved.

Despite the absence of quantitative details regarding the revenue impact, Divi’s expects this contract to contribute meaningfully to its financials over the duration of the agreement. This aligns with Divi's broader strategy to enhance its presence in the custom synthesis and contract manufacturing segment.

Custom synthesis is a high-value segment within the pharmaceutical industry, where companies like Divi’s develop and manufacture tailor-made chemical compounds for global pharmaceutical giants. This area has become a key growth driver for Indian pharma players, especially as many multinational firms seek reliable, cost-effective, and high-quality suppliers in Asia.

The agreement also positions Divi’s favourably to capitalise on the China plus one strategy, where global pharma companies diversify their sourcing away from China and towards trusted partners in India. Divi’s has already established itself as a preferred partner through its world-class facilities, regulatory compliance, and ability to scale manufacturing based on client requirements.

With this agreement, Divi’s Laboratories is also expected to strengthen its leadership position in the Indian pharmaceutical custom manufacturing space. The addition of new manufacturing capacity not only serves the requirements of the new partner but also provides long-term infrastructure to support additional global business opportunities.

Divi's Laboratories is known for its strong research and manufacturing capabilities, and it is among the top suppliers of generic APIs and custom synthesis products globally. With over 30 years of experience, the company operates out of multiple US FDA and EU GMP approved sites in India and supplies to more than 95 countries worldwide.

In its recent quarterly earnings report, Divi’s had already indicated a strategic shift towards deeper involvement in custom synthesis projects and away from low-margin generic APIs. This new long-term agreement underscores the execution of that strategy and marks a major milestone in its growth journey.

With robust demand, strategic capacity investment, and a trusted global customer, the company is well-positioned to deliver sustainable earnings growth in the coming years.

This long-term partnership is also a validation of Divi’s technical strength, supply chain reliability, and compliance record — factors that are becoming increasingly important for global pharmaceutical companies post-pandemic.

The investment of Rs 650 to 750 crore will be deployed in phased capacity additions, supported by upfront advance payments. This de-risks the investment and ensures that capacity creation is backed by guaranteed offtake from the global customer.

The company also confirmed that no share exchange ratio or acquisition is involved as this is a pure manufacturing and supply agreement.

Key Regulatory Disclosure Points:

• Agreement Type: Long-term manufacturing and supply

• Partner: Global pharmaceutical company (undisclosed)

• Nature: International

• Scope: Manufacturing of advanced intermediates

• Revenue Impact: Meaningful contribution expected

• Investment: Rs 650–750 crore in capacity

• Funding Source: Customer advance payments in phases

• Related Party: Not applicable

The filing was made by M. Satish Choudhury, Company Secretary and Compliance Officer, who stated that this development is in line with Divi’s strategic objectives to deepen its international footprint and expand its custom synthesis vertical.

This announcement is likely to generate positive sentiment among investors and stakeholders, as it strengthens the visibility of long-term revenue streams for Divi’s, which operates in a highly competitive but fast-growing global pharmaceutical outsourcing market.

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