Friday, 19 August 2016

Piramal eyes more M&As in pharma, will launch new funds: Chairman Ajay Piramal



Piramal Enterprises has acquired US-basedAsh Stevens in an all cash-deal valued at $43 m


Piramal Enterprises has acquired the US-based Ash Stevens, a contract development and manufacturing company, in an all-cash deal valued at nearly $43 million. Ash Stevens will be the third facility for Piramal Enterprises in the North American market. Speaking to BTVI, Piramal Group Chairman Ajay Piramal says the company is looking at growing both organically and through acquisitions in the pharma space. The group is also looking at renewable and financial services as major growth opportunities, he said. Excerpts:

Can you take us through the benefits, the synergies and the rationale behind the Ash Stevens deal?
Ash Stevens is a manufacturer of high-potency API (active pharmaceutical ingredients). This is a niche, fast-growing market. In the last six years, the CAGR in this business has been about 9.9 per cent as far as the high-potency APIs are concerned. And we believe that this will form an important part of our client strategy
In North America, we have a facilityin Canada which makes high-value, low-volume products, intermediates and finished products. We also have an injectable facility in Lexington, Kentucky; and this will fit in well with that.
Besides, the customers that we have for Ash Stevens and our existing customers are very complementary to each other. Therefore, we will expand the customer base that we have; the sales force we have today will be able to sale these products as well. So we just increased our overall product offering to our customers.


You have been accumulating assets with niche abilities and capabilities. Where would your next focus area be in terms of geographic exposure or the addition of another such facility? Is it safe to assume that the interest will continue in the US?
In a pharmaceutical business, we have really three components. One is contract research and manufacturing (CRAM) or what we call pharma solutions. The other is critical-care product from which we make products such as inhalation and anaesthesia products, which go into critical-care centres such as surgery. And the third is OTC (over-the-counter).
Whereas CRAM and critical-care are both global businesses, OTC is an Indian business. So we look at growing both organically and through acquisitions in all these areas. So you could see acquisitions, both for products as well as for services.
It will not necessary happen only in the US, even though the US is the largest market. It could be also in Europe or in Japan as well. In the OTC space, which is only an Indian market that we carter to, we will do acquisitions only in India.
In the last eight months, we have acquired a series of three groups of brands for OTC in India.


You also recently invested ₹800 crore in ACME Solar. What is the rationale behind that and what are your future plans for it?
We are not really running these businesses as investment. It is not like we do in Ash Stevens. These are loans from which we earn interests over a fixed period of time and we will get it back. That is one thing.
On the other hand, we do feel that solar and renewable energy is a high-growth area and we want to back good promoters in this area so that they can create value and so can we.


The results have been good and you have been making acquisitions as well. What can we expect from the group in FY17?
As far as growth is concerned, I think we are fortunately well placed in those areas where we see good growth. So first, we see financial service, which is growing well with the growth in economy and PSU banks taking a little bit of back seat. It gives a good opportunity for NBFCs and private-sector companies to do well and gain market share. We will also launch a few funds in the near future.

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