Ajay Piramal begins 2nd innings in pharma

Ajay Piramal, who sold off his pharmaceutical formulations business in 2010 to multinational Abbott for the then record valuation of $3.7 billion, has begun his second innings in pharmaceuticals by demerging the remnant pharma business into a separate company and listing on the stock exchanges.

Piramal Pharma Limited (PPL), with scrip name PPLPHARMA, was today listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

"Post listing, our family will have 35% stake in PPL and Carlyle Group will have about 20% and the rest will be with the public," Nandini Piramal, chairperson of Piramal Pharma and executive director of Piramal Enterprises told Fortune India.

As part of the Abbott formulation sales deal, there was a non-competition agreement with Abbott, which ended in September 2019. Since then the Piramal family was slowly strengthening pharma business, with several acquisitions in their chosen areas.

In June 2020, PPL signed an agreement with private equity major Carlyle Group to invest $490 million (₹3,705.8 crore) for a 20% stake in pharma business. Accordingly, the pharmaceuticals business was demerged from Piramal Enterprises Limited (PEL) to simplify the corporate structure from being a multi-sector conglomerate to two separate sector-focused listed entities in financial services and pharmaceuticals, says Nandini Piramal.

She says PPL has lined up an investment of over ₹1,200 crore in the coming 2-3 years alone in brownfield expansions.

"The simplification of the corporate structure will unlock greater shareholder value and PPL is well poised to be a global Indian brand in the pharmaceutical space," according to Ajay Piramal, chairman of Piramal Enterprises. He says PPL has an integrated business model, niche product offerings and a global team to deliver responsible growth in the future.

Ajay Piramal started out in his family's textile business at age 22 in 1977, but moved to pharmaceutical business by exiting textiles and acquiring Nicholas Laboratories in 1988. Later, he acquired Indian businesses of several multinationals like Boehringer Mannheim, research unit of Hoechst Marion Roussel (India) in Mumbai, Rhone Poulenc India, etc, to grow as one among the top five pharmaceutical companies in India. During that growth journey, Nicholas Piramal became Piramal Healthcare, and following an entry into the financial services business, was renamed as Piramal Enterprises.

PPL's main businesses are in Contract Development and Manufacturing Organisation (CDMO), complex hospital generics business and an India focussed consumer healthcare business, selling over-the-counter (OTC) products. In addition, it has a joint venture with Allergan, a leader in ophthalmology in the Indian formulations market. PPL’s CDMO business had revenues of ₹3,960 crore in FY22 and it offers end-to-end development and manufacturing solutions across the drug life cycle to innovators and generic companies. It has about 15 facilities across the globe and about 25% of its clients are top multinational drug makers. "We have also taken baby steps in biotech CDMO by acquiring a small company in this space," says Nandini Piramal.

"We expect an EBITDA CAGR of 26% for over FY22-24, led by 10%/12% sales CAGR in the CDMO/CHG segment and strong operating leverage," says a Motilal Oswal analyst report on Piramal's healthcare business.

Its complex hospital generics business had revenue of ₹2,002 crore in FY22 and sells complex products like inhalation anesthetics, intrathecal therapies for spasticity and pain management, injectable pain and anesthetics, injectable anti-infectives, and other therapies. "This business has a strong pipeline with 40 plus products at various stages of development and growth will be stronger in future," says Nandini.

The consumer healthcare business had FY22 revenue of ₹741 crore and is now among the leading players in India with popular brands like antacid Polycrol, Saridon and Lacto Calamine. "We have built on power brands and launched 40 new products and 18 new SKUs, and are expanding distribution into modern trade stores and e-commerce channels," says Nandini. "Going forward, we intend to maintain focus on growing our chosen business lines and will identify and secure inorganic and organic growth opportunities."