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Piramal Healthcare plans buys in contract manufacturing

15 Jul 2010 Evaluate

Piramal Healthcare Ltd (PHL) is gearing up for major acquisitions in the contract manufacturing segment. The decision comes after hiving off its flagship formulation division to multinational drug maker Abbott for over Rs 17,500 crore and its ailing pathology and radiology laboratory network to Super Religare Laboratories Ltd (SRL) for Rs 600 crore.

After hiving off the divisions, the company is now chalking out aggressive strategies to scale up the Rs 1,470-crore remaining businesses of PHL in critical care, contract manufacturing and over the counter (OTC) segments. Contract manufacturing will be a major area of growth in the future, as multinational companies are cutting down production facilities and the expectation is to get big business in the future in this segment. Hence acquisition of facilities in India and abroad.

After completing the deal with Abbott, PHL will retain 11 manufacturing units in India, UK, Canada and the US. Its pharma solutions (custom manufacturing) business had recorded lower sales of Rs 880 crore in 2009-10 compared to Rs 1,060 crore during the previous year. The slump in business was primarily due to the closure of a manufacturing facility at Huddersfield, UK. Piramal Healthcare is one of the first entrants into contract manufacturing business and has supply agreements with nine out of the top 10 multinational drug makers. This will act as a boost for the company to scale up its business in this segment.

PHL will follow an aggressive acquisition strategy to scale up its Rs 327-crore turnover critical care (mainly anaesthesia products) business. Targets of acquisitions in the domestic and overseas markets will be primarily products and services related to critical care. PHL is also looking at acquiring more brands in the Over the Counter (OTC) segment in the domestic market.

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