Piramal to shift UK facility

Piramal Healthcare, which yesterday inducted Nandini Piramal, daughter of promoters Ajay Piramal and Swati Piramal as an executive director on the board, has announced the closing down of an active pharmaceutical ingredient (API) contract manufacturing facility at Hudders Field in the UK.

The facility employs 93 people and the closure of the plant is aimed at moving manufacturing to other UK locations and to sites in India. This would incur Piramal Healthcare an expenditure of Rs71 crore, or over 10 million British pounds, as compensation to employees and product transfer liabilities, Ajay Piramal, chairman of Piramal Healthcare, told an analysts’ conference yesterday.

 

These liabilities would be accounted for in the fourth quarter of 2008-09, he said.

This facility was added by Piramal Healthcare in 2005 through the acquisition of Avecia, a privately-owned specialty chemical company with locations in the UK, the US and Canada. Currently, Piramal Healthcare is among the top ten contract manufacturing pharmaceutical companies in the world.

Ajay Piramal said the decision would help profit margins from Pharma Solutions Business(PSB) to improve by 6-8 per cent. Currently, this API manufacturing site has a capacity utilisation of only 30-35 percent.

Current contract manufacturing jobs at this site will be moved to Morepath, another acquired facility in UK, and to Ennore and Ahmedabad in India. Results from re-location of manufacturing will be visible by 2010-11.

Piramal Healthcare expects pharma solutions business from overseas to degrow by 5 per cent this year, but contract manufacturing with Indian locations will grow by 15 per cent over the next 2-3 years. Currently its contract manufacturing business in India is worth Rs370 crore.

Ajay Piramal said though small biotech companies into clinical trials are facing funding issues and thus loss of business, multinational companies have increased their outsourcing to keep down costs. Besides, there is an increased attempt to push more drugs into the clinical trial stage, which throws open more opportunity for companies like Piramal Healthcare.

A Piramal Healthcare press release yesterday said Nandini Piramal has been inducted into the Board of Directors. Wockhardt appointed Dr Murtaza Khorakiwala, son of chairman Habil H Khorakiwala, as the new managing director, this week.

An MBA graduate from Stanford Graduate School of Business, Nandini Piramal was working as general manager strategic marketing and was associated with the Company's overseas subsidiaries. Earlier, she had worked as a business analyst with McKinsey & Co., said the release.

Share prices of Piramal Healthcare rose 4.15 per cent today to close at Rs201.80.