ET Bureau|Dec 18, 2019, 09.05 AM IST
Mumbai: Piramal Enterprises Ltd. has put up 20% equity in its healthcare vertical for sale, seeking to expand the business. PEL wants to accelerate growth for its healthcare division through acquisitions that will expand its portfolio of products, offer opportunities to buy brands or leverage its distribution network across the US, Europe and Asia, the company said in an email to ET. To realise this plan, the group is looking to raise funds or bring in a financial partner. The funds will be raised through the issue of a minority stake of up to 20% in the pharma business, which will be “purely growth capital and infused into the pharma subsidiary,” the company said.
Piramal’s healthcare and over-the-counter product business is handled by Nandini Piramal, daughter of promoter Ajay Piramal. Of the group’s revenue of Rs 13,215 crore in FY19, pharma contributed Rs 4,786 crore, or 36%, with an 11% growth from a year earlier. Over 90% of the group’s pharma revenue is from the niche businesses of complex generics and contract development and manufacturing operations. The opportunities that PEL will be targeting for the pharma business extend from contract research and India OTC to branded generics.
After selling its India pharma business to US drug maker Abbott for Rs 17,000 crore a decade ago and expanding to sectors such as real estate and financial services, Piramal has been charting plans to expand its healthcare vertical and build it up again from the scratch. The non-compete agreement with Abbott in the generics business ended last year, and the group has been looking to re-enter the segment in India.
Piramal Healthcare has bought brands in the OTC segment from multinational companies including MSD and PfizerNSE 0.01 %. Its brands include Saridon and Lacto Calamine. As Indian drug makers transition through a compliance-driven, low-margin US pharma business, they are setting their sights on their home market. Indian pharma posted a 15% growth in November, according to market research firm AIOCD-AWACS. The Indian regulator allowed prices of some drugs to be increased last week after companies sought relief from higher input costs. ICICI Securities in its pharma outlook note for 2020 said the group continues to bet on companies with higher India sales, clean FDA status and visibility of margin improvement.