Piramal Healthcare to acquire US based DRG to boost R&D

Barely a month after acquiring the new molecule division of German pharmaceutical major Bayer, Piramal Healthcare is buying a US company marking its foray into the healthcare information management space. The Mumbai-based company, flushed with cash after it sold formulations business to US-based Abbott Laboratories for $3.72 billion in 2010, will acquire healthcare data provider Decision Resources Group (DRG) for $635 million (Rs 3,400 crore).



"This is a niche business with stable revenues and low capex but high cash flows. The global healthcare industry is facing several challenges, including rising research costs, lower drug approval rates, mounting regulatory pressures and increasingly complex reimbursement models," Piramal Healthcare chairman Ajay Piramal told the media here.

The global healthcare information industry is valued at about $5.7 billion and tough regulatory challenges in R&D are expected to boost demand for researched data on existing as well as new molecules, Piramal added.

The acquisition, which is expected to be closed by June 30, would be funded through an equal mix of debt and equity. On completion of the acquisition, Piramal will operate DRG as a standalone business. DRG employs about 300 analysts and is expected to rake in revenues of about $160 million in 2012. The company counts 48 of the top 50 global pharmaceutical companies as its clients and has 95 per cent customer retention rate.

On April 16, Piramal Healthcare signed an agreement to acquire worldwide rights to the molecular imaging research and development portfolio of Bayer Pharma AG. Financial aspects of the deal were not disclosed.

In June 2010, the company had signed an agreement with Canada-based BioSyntech to acquire its assets for C$3.9 million (about Rs 17.65 crore) foraying into the biotechnology sector.

In 2010, Piramal sold its domestic formulations business to Abbott Healthcare for an up-front payment of $2.2 billion and additional payments of $400 million per year for four years beginning 2011. Flushed with these investments, the drugmaker invested in the Indian arm of the UK-based telecom major Vodafone for an 11 per cent stake, and was looking at acquiring companies with dependable businesses.

Courtesy: Mail Today