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Piramal Targets $1 Billion Sales By 2020 Via Pharma Business Re-Entry

Piramal looks to re-enter domestic pharma business.



Ajay Piramal, chairman of Piramal Healthcare Ltd. (Photographer: Dhiraj Singh/Bloomberg)
Ajay Piramal, chairman of Piramal Healthcare Ltd. (Photographer: Dhiraj Singh/Bloomberg)

Billionaire Ajay Piramal is looking to re-enter the domestic pharmaceutical business as Piramal Enterprises Ltd. nears the end of its non-compete agreement with Abbott.

“We are not in the domestic pharma space,” said Ajay Piramal, chairman of Piramal Group, in an interview with BloombergQuint, “We have a non-compete with Abbott till 2018 and in letter and spirit we will honour that. After that we will see,” he added.

The company is in the process of raising Rs 7,000 crore for the first time in 25 years. While the bulk of the proceeds will go towards Piramal’s financial services business, a part of it will be used to engineer the re-entry into domestic pharma. It last raised Rs 100 crore in equity from foreign investors in 1992.

Piramal Enterprises had sold its domestic formulation business to Abbott Pharma in 2010 for $3.8 billion. Post the sale, its pharma portfolio comprised of over-the-counter brands and the global pharmaceutical business which accounted for Rs 1,605 crore in revenue at the end of financial year 2010-11.

Since then, the group has scaled up its global pharma and over-the-counter business. Piramal’s pharma business had a revenue of Rs 4,054 crore in the last financial year. That contributed nearly 47 percent to the group’s revenue. A re-entry into the domestic pharma business can help the company achieve a revenue of Rs 6,500-7,000 crore and margin of 20-25 percent by 2020, according to a investor presentation made earlier this year.

Eyeing Stressed Assets

The company is also looking at stressed assets in the pharma sector. Most such assets in the industry are not in the branded generic space but in active pharmaceutical ingredients that the company can explore even now, Piramal said.

Piramal currently has a has strong portfolio of branded generic products which it distributes in more than 100 countries. It has 13 facilities, including nine approved by the U.S. Food and Drug Administration and based in the U.S., U.K. and India.

The company has so far invested over Rs 6,400 crore in its pharma business since 2010. It has been aggressive in adding to its pharma portfolio in the last two years with seven acquisitions, which turned out to be value accretive.

Watch the full interview with Ajay Piramal here.