Nicholas Piramal rejigs operations

Brand portfolio to be widened, Some products on sale.

In a restructuring exercise, drug major Nicholas Piramal has divided its operations into 14 strategic divisions from around eight business units in 2002.

It has also churned its product portfolio by pushing more products into its primary brands basket (which will now account for 75 per cent of sales, up from the earlier 65 per cent) and intends to transfer vitamins, gastroenteritis and some cough and cold brands to its over-the- counter (OTC) portfolio, handled by joint venture subsidiary, Boots Piramal.

Nicholas Piramal has identified holes in its product portfolio which it intends to fill by acquiring brands both in India and overseas. At the same time, the company has put on the block some of its brands that have a turnover of less than Rs 1 crore to Rs 3 crore. It has also announced a Rs 200 crore capital expenditure plan.

Nicholas Piramal has also appointed Ananth Narayaran, a former Ranbaxy Laboratories and Cipla executive, as head of its US operations.

Vijay Shah, chief operating officer of Nicholas Piramal, told Business Standard: "The idea behind creating multiple divisions is to make each of these units into individual profit centres backed by a dedicated field force and concerted focus. With smaller divisions handling a limited number of brands, aggressive growth targets become easier to achieve."

Pharmaceutical industry analysts said Nicholas Piramal's restructuring was meant to bring greater focus to the business and that several pharmaceutical companies like Ranbaxy, Sun Pharmaceuticals, Unichem Laboratories and Zydus Cadilla had done similar exercises in the past.

The 14 divisions of the company are MS (general and orthopaedic), EC1 (cerebro neuro psychiatry), EC2 (diabetes), Biotech (Roche products), Actis (general, respiratory and paediatrics), Cardex1 (cardiology-hypertension), Cardex2 (dislipidaemia), Carex (anaesthesia), Glotek (gynaecological and dermatology drugs), Sarabhai1 (general, pain management focus), Sarabhai2 (general and anti-infectives), Sarabhai3 (franchisee field force -general), Zivon (franchisee field force - general) and Institutional (general).

"We are completely de-focused from some of our tertiary brands and are not investing in these brands. While we intend to sell these brands, we do not intend to opt for distress sale," Shah added. He, however, refused to divulge the names of the brands.

Among the Nicholas Piramal OTC brands that may be shifted to Boots Piramal are Avomine (a drug for gastroenteritis), Sorbitrate (a cardiovascular drug) and vitamin brands like Supradyn. "These are essentially preventive medicine and should ideally fall under the OTC portfolio," senior company executives said.

However, Nicholas Piramal will need government approval to shift these products, which are currently under the prescription category, to the OTC category.

The company has identified gaps in its gynaecological, pediatrics and cardiovascular portfolio and is scouting for acquisition targets, both in the domestic market and abroad. "We are evaluating some potential acquisition proposals on the table," Shah said.

The new prescription

• Nicholas Piramal divides operations into 14 strategic divisions from around 8 business units.
• Each division to be a profit centre, with a dedicated sales force.
• Low-turnover brands to be sold VOTC drugs to shift to group company Boots Piramal.