Piramal acquires Pfizer's UK unit

Nicholas Piramal India Ltd (NPIL) today signed an agreement to acquire one of the manufacturing facilities of Pfizer Inc located at Morpeth in the UK for an undisclosed sum. Industry sources pegged the deal at Rs 230 crore.

The Morpeth facility, one of Pfizer's integrated facilities in the world, has end-to-end production and supply chain capabilities that cover active pharmaceuticals ingredients (APIs), finished dosage, packaging and distribution of drugs.

The Pfizer unit has approvals by the USFDA and the UKMHRA (the drug regulator of UK). It is a supply hub for certain Pfizer products supplied to the US, Europe and Japan.

The transaction was done through NPIL's wholly owned subsidiary in the UK "" NPIL Pharmaceuticals (UK) Ltd (earlier, Avecia Pharmaceuticals, UK ), on an asset purchase basis.

The transaction includes a supply agreement with Pfizer till November 2011 and envisages potential revenues worth over $350 million, besides fixed assets and property and certain net current assets.

The Morpeth deal is part of NPIL's inorganic growth strategy in the European custom manufacturing space. It is NPIL's third acquisition in the UK after Rhodia's Inhalation Anaesthetics business in December 2004 and Avecia's custom manufacturing business in December 2005.

With this acquisition, NPIL has gained strategic entry into the global sourcing network of Pfizer Inc.

In December last year NPIL secured a 7-year contract manufacturing-related R&D services agreement with Pfizer International LLC under which NPIL is to provide process development and scale-up services to Pfizer's animal health division.

With the acquisition of Morpeth, NPIL will become the biggest supplier (in terms of spend) within Pfizer's Global Contract Manufacturing network; with supplies to over 100 global markets.

Ajay Piramal, chairman, NPIL, said the purchase expanded NPIL's global footprint, particularly in the finished API, contained finished dosage, packaging and supply chain areas.

On completion of this deal, NPIL would emerge as one of the world's top-10 pharmaceuticals outsourcing companies, across custom synthesis, APIs and finished dosage, Piramal said. In annualised terms, NPIL is expected to have custom manufacturing revenues exceed $200 million.

"This acquisition again demonstrates NPIL's commitment to provide an across-the-life-cycle and across-the-value-chain service to pharmaceutical companies. We are proud to have the highly respected Morpeth team aboard.

"Morpeth has a long tradition of excellence in manufacturing and supply chain," he added.

NPIL anticipates funding of the total consideration from its projected pre-acquisition internal accruals of financial year 2007.

"The transaction is on a liability and cash-free basis though the completion is subject to required regulatory and other approvals, which are expected by June 19, 2006," Piramal said.

"Morpeth's team of about 450 people has rich experience in new product launch, site technical transfer and operational excellence initiatives," he added.