Intellectual Thoughts by Sanjay Panda !!!!!: February 2009


Tuesday, February 24, 2009

Is Piramal healthcare on sale!!!!!!!!!!

Piramal healthcare, india’s fifth largest pharmaceutical company by revenues (Rs 2,873 crore in FY 2007-08), may sell its branded generics business, Healthcare Solutions, to focus on contract research and manufacturing services (CRAMS). This is contrary to the perception that promoter Ajay Piramal is selling the entire company.
Its being remoured that Piramal appointed Zurich-headquartered Credit Suisse to look for prospective buyers. UK drug giant GlaxoSmithKline (GSK), France’s Sanofi-Aventis and Germany’s Merck KGaA are believed to have shown interest.

Recent media reports suggested that Piramal was in talks for the sale of the entire company. However, Piramal denied this in a 7 February communiqué: “Certain sections of the media have been speculating about a potential sale of the company.

Healthcare Solutions that recorded revenues of Rs 1,291 crore in fiscal 2008, or about 40 per cent of the company’s total revenues, includes a portfolio of products in therapeutic segments ranging from respiratory and anti-infectives to diabetes, marketed only in India.

According to a recent McKinsey study, the Indian market is likely to triple to $20 billion by 2015. While Sanofi-Aventis and Merck have a relatively small presence in India, GSK is one the largest companies in the domestic market after Ranbaxy Laboratories and Cipla. However, GSK’s sales have witnessed poor growth over the last year, at just 2 per cent to Rs 1,752 crore in 2008.

Piramal started investing in Crams, a market estimated at about $800 million in India and growing at 40 per cent every year, almost a decade ago and has made several acquisitions abroad, including Pfizer’s Morpeth plant in the UK in 2006 and Avecia’s custom manufacturing business in 2005, to expand its customer base. The group still needs to transfer more business to India to improve the overall margins of that business.” The process may take longer than expected.

BW