Piramal Enterprises to demerge healthcare, financial services

Mumbai : The Ajay Piramal-led Piramal Enterprises will demerge its healthcare and financial services businesses soon, a top company official said.

"We want to ultimately look at Piramal Enterprises as separate business for pharmaceuticals and financial services. In the medium term we will do that. All our acquisitions, and in some ways moving up in value chains and getting more critical mass are steps towards that," Piramal Enterprises Chairman Ajay Piramal told reporters here.

Declining to give a time-line, Piramal said "we have not yet fixed time line. I think the Board will decide, but the direction is moving towards that."

Ajay Piramal curtailed his presence in healthcare after he sold erstwhile Piramal Healthcare's domestic formulations division for $3.7 billion to Abbott in 2010. The company entered into the finance business through strategic investments and joint ventures.

Piramal Enterprises is growing largely organically with a CAGR of 17 per cent over last the five years.

To boost its product portfolio, Piramal Enterprises on Monday announced acquisition of portfolio of a drugs for spasticity and pain management from UK-based Mallinckrodt for $171 million (around Rs 1,160 crore) in an all-cash deal.

"We continue to invest in the growth of our pharmaceutical businesses. This would be our seventh pharma acquisition in the last two years, taking our investment for inorganic growth to Rs 3,000 crore across our pharmaceutical businesses to boost future growth," Piramal said.

"All these acquisitions are expected to be value accretive and will improve our pharmaceutical segment's growth. High EBITDA margins of the acquired products are expected to enhance our profitability."

The company's UK-based wholly-owned subsidiary Piramal Critical Care has entered into an agreement with Mallinckrodt for acquiring the drugs and may also pay an additional USD 32 million, depending on financial performance of the acquired assets over the next three years till FY21.

The acquired portfolio includes Gablofen (baclofen), a severe spasticity management product, currently marketed in the US, and two pain management products.

Commenting on synergies from the acquisition, Piramal said "Gablofen used by doctors and hospitals leverage our US operations and capabilities.

"With this acquisition, we have entered into an attractive niche market. Intrathecal baclofen serves an important medical need to severe spasticity patients. Access to this niche market diversifies our offerings in the US market and allows further growth within the global generic hospital drug market of more than $20 billion in size.

The company's 35-40 per cent revenues comes from the US operations, he said, adding it had 24 US FDA inspections, but had no issues with that in last few years.