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| Piramal Health looks at buyout for expansion |
| Reghu Balakrishnan / Mumbai Jun 17, 2011, 00:37 IST |
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In talks with global players to acquire contract research facilities, critical care biz
Piramal Healthcare, sitting on a huge pile of cash after selling its main business to Abbott, is set to strengthen its global presence in contract research and manufacturing services (CRAMS) and critical care business through the acquisition route.
The company is engaged in talks with a clutch of global players to acquire contract research facilities and business as well as pain management and anaesthetic products for critical care division, said N Santhanam, executive director and COO. Piramal sold its domestic formulation business to US-based Abbott Labs for Rs 17,000 crore last year.
The Indian CRAMS market was pegged at approximately $3.8 billion in 2010 and is estimated to touch $7.6 billion by 2012.
“The CRAMS facilities in Ahmedabad, Hyderabad and Chennai are mostly running at full capacity, and in the backdrop of increasing number of outsourcing contracts from MNCs, we are expanding the business through buyouts of facilities abroad,” he said. He refused to disclose details.
According to a recent study from rating agency Icra, the global CRAMS market is expected to grow to approximately $85 billion by 2012. “Increase in outsourcing from developed to developing countries will continue as the innovator companies will lose patent protection from any of the blockbuster drugs over the next few years; thereby forcing them to look for various alternatives such as, cost control and introduction of generics to their portfolio,” the report said.
For Piramal Health, there is a possibility of buying out customers or product registration from other foreign players.
According to the report, contract manufacturing in India is likely to dominate the CRAMS space, with a high number of US Food and Drug Administration approved plants, skilled manpower and technical competencies coupled with inherent cost advantage.
“Before the financial crisis took place, CRAMS business was doing well worldwide. The business got affected after the inventory crunch started in September 2008," Santhanam said.
In 2006, Nicholas Piramal India acquired Pfizer Inc’s plant at Morpeth, UK, entering into a five-year pact to manufacture 12 Pfizer products for $350 million. Piramal Healthcare owns facilities in Grangemouth, UK and Torcan, Canada through its buyout of the pharmaceutical custom synthesis business of Avecia Pharmaceuticals in 2005.
“In critical care business, we have already gained 20 per cent of the US market of anaesthetic products since 2009. We are looking to expand by adding more products and utilising our contacts with US hospitals and strong field force,” he said.
The company is looking to buy out brands in areas like anaesthesia and pain management in the US. In critical care space, Piramal Healthcare has already made a number of significant acquisitions.
In 2009, Piramal Healthcare acquired US-based RxElite Holdings, the inhalation anaesthetic gas distribution arm of RxElite for $4.2 million in an all cash deal. In 2008, in had acquired US-based Minrad International, a manufacturer of generic inhalation anaesthetic drugs for $40 million. Last year, Piramal Healthcare had bought the anaesthetic products business of Bharat Serum Vaccines.
The major drug, profol, which is used for the initiation of anaesthesia, has a global market of $825 million.
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