Piramal Enterprises looking at acquisition of multiple pharma assets, possible re-entry into domestic formulations

Acquisitions of niche manufacturing capabilities for a Contract Development and Manufacturing Organisation, hospital generics business to sell specialised products in over 100 countries, and organic and inorganic addition of healthcare products among targets.

Piramal Enterprises Ltd (PEL) is looking at multiple acquisition opportunities across its pharma business, including a possible re-entry into domestic formulations, which the company exited in 2010.
The company, in its FY21 annual report, said that it is looking at acquisitions of niche manufacturing capabilities for a Contract Development and Manufacturing Organisation (CDMO).
A CDMO is a company that serves other companies in the pharmaceutical industry on a contract basis to provide comprehensive services from drug development to manufacturing.
It is also looking at adding new complex hospital generics through in-licensing, acquisitions, and capital investments, and organic and inorganic addition of consumer healthcare products to leverage the pan-India distribution platform and explore re-entry into domestic formulations.
“The Carlyle Group’s recent strategic investment confirms the business’s underlying strength and provides us with a war chest for the next phase of growth,” said Ajay Piramal, Chairman of Piramal Enterprises, in the annual report.
“Each of the pharma businesses has a compelling plan for organic growth, with multiple acquisition opportunities. We believe that we will continue to deliver in line with our long-term growth track record through organic initiatives. In addition, we will target a few more acquisitions to further boost our growth,” Piramal said.
A year ago, in one of the largest PE deals in the Indian pharma sector, Piramal raised Rs 3,523 crore from Carlyle. The deal was structured in such a way that the pharma business will be clubbed into a subsidiary called Piramal Pharma, a 100 percent-subsidiary of Piramal Enterprises, in which 20 percent equity will be given to Carlyle.
PEL will be the holding company. Separate board and management teams were created for Piramal Pharma. The eventual goal is to demerge and separately list the pharma and financial services businesses.
The company said it would utilise the divestment proceeds for pharma acquisitions, expansion of existing manufacturing operations and debt repayment.
Pharma business, the growth driver
Piramal Pharma would include an end-to-end CDMO business, a complex hospital generics business, selling specialised products in over 100 countries and a consumer products division that sells over-the-counter products in India.
A joint venture investment with Allergan India to make ophthalmology products in the domestic market and Convergence Chemicals, a joint venture with Navin Fluorine International, to make fluorochemicals would also come under Piramal Pharma.
The pharma business contributed about Rs 5,776 crore or 45 percent of total revenues in FY21 for PEL, registering a 7 percent growth. The EBITDA of the pharma business stood at 22 percent.
About 63 percent of revenues from the pharma business come from the CDMO business, under which the company provides development and manufacturing services for innovators and generic pharmaceutical companies. The CDMO business grew 15 percent during the year on the back of a strong order book. The company said it added 50 new customers during the year.
In addition, its patent development programme saw a 3x increase in the number of phase III molecules from 10 in FY2017 to 30 in FY 2021, and commercial products under patent saw an increase from 11 to 19 in the past two years.
Piramal has been active in deals in FY21, especially to expand its CDMO capabilities. The company has acquired a solid oral dosage facility in Sellersville, Pennsylvania, in June 2020.
It also agreed to acquire Hemmo Pharmaceuticals in March 2021, adding peptide API development and manufacturing capabilities for an upfront consideration of Rs 775 crore and milestone-linked earn-outs.

Source : moneycontrol