 "Piramal aims to be among top 3 in OTC business")
Piramal Enterprises aims to be among the top three players in four years in the $2.2-billion over-the-counter (OTC) pharmaceutical products business, climbing from seventh slot at present.
This could be an ambitious target in a highly competitive market led by multinationals GlaxoSmithKline and Reckitt Benckiser, and domestic household names like Dabur and Emami.
But with Rs 15,000 crore in cash and investments on the books of Piramal Enterprises, competition is watching the moves of Nandini Piramal carefully. Piramal scion is directly responsible for growth of this business. As an executive director, she also oversees the larger health care portfolio of the company, including contract manufacturing and critical care businesses.
She has already made six acquisitions for the health care business in the past two years, putting Rs 1,800 crore to work. Three of these were made in the OTC business. This includes baby care products from Little’s, which helped it in getting into a new segment. Besides, it acquired four gastro-intestinal products from Merck to complement its existing portfolio. It also acquired five legacy brands from Pfizer, including Waterbury’s Compound and pain reliever Sloan’s.
Nandini could be repeating what father Ajay Piramal did earlier. He bought Nicholas Laboratories in 1988, when it was ranked 48th in the domestic market and turned it into third largest company through a series of acquisitions. In 2010, he sold the domestic formulation part of the business to Abbott for $3.8 billion (Rs 17,500 crore), but retained the OTC, critical care and contract manufacturing businesses. Nandini could not have missed the lessons of value creation her father is known for delivering. Ajay Piramal continues to provide guidance as chairman of the company.
“We are ready for acquisitions — big and small,” said Nandini Piramal, saying being in the top three is only a short-term goal. “The OTC market is fragmented. There are big brands in a few categories but we believe there is a lot of room to play.” With an unparalleled war-chest, investment bankers have made a beeline to her office.
This could be an ambitious target in a highly competitive market led by multinationals GlaxoSmithKline and Reckitt Benckiser, and domestic household names like Dabur and Emami.
But with Rs 15,000 crore in cash and investments on the books of Piramal Enterprises, competition is watching the moves of Nandini Piramal carefully. Piramal scion is directly responsible for growth of this business. As an executive director, she also oversees the larger health care portfolio of the company, including contract manufacturing and critical care businesses.
She has already made six acquisitions for the health care business in the past two years, putting Rs 1,800 crore to work. Three of these were made in the OTC business. This includes baby care products from Little’s, which helped it in getting into a new segment. Besides, it acquired four gastro-intestinal products from Merck to complement its existing portfolio. It also acquired five legacy brands from Pfizer, including Waterbury’s Compound and pain reliever Sloan’s.
Nandini could be repeating what father Ajay Piramal did earlier. He bought Nicholas Laboratories in 1988, when it was ranked 48th in the domestic market and turned it into third largest company through a series of acquisitions. In 2010, he sold the domestic formulation part of the business to Abbott for $3.8 billion (Rs 17,500 crore), but retained the OTC, critical care and contract manufacturing businesses. Nandini could not have missed the lessons of value creation her father is known for delivering. Ajay Piramal continues to provide guidance as chairman of the company.
“We are ready for acquisitions — big and small,” said Nandini Piramal, saying being in the top three is only a short-term goal. “The OTC market is fragmented. There are big brands in a few categories but we believe there is a lot of room to play.” With an unparalleled war-chest, investment bankers have made a beeline to her office.
The company started its independent OTC business in 2007 and made two acquisitions — contraceptive i-pill in 2011 and skin allergy lotion Caladryl in 2013. Its biggest brand is oral analgesic Saridon, with annual sales of Rs 131 crore. OTC is currently the smallest segment in its pharma portfolio with annual sales of Rs 393 crore in 2015-16. The company’s health care business, spread across three lines reported, Rs 3,558-crore revenue in the period, a compound annual growth rate of 17 per cent for five years.
The company operates in the self-care segment of the OTC market, pegged at Rs 12, 000 crore and growing at 12-13 per cent annually. The company says it is seventh biggest in the business. According to India Brand Equity Foundation, OTC is 21 per cent of the $20-billion pharmaceutical industry in India.
Nandini might not have an easy ride in this segment, as other heavyweights like Sun Pharmaceutical are also eyeing the OTC market with a greater focus. India’s most valued pharma company has top-selling OTC brands such as health supplement Revital and painkiller Volini. These products became a part of Sun Pharmaceutical’s portfolio after it acquired Ranbaxy two years ago. With the strength of popular brands in its kitty, the company has increased its focus on the segment by introducing new products for this segment. In June, it re-launched dermatology prescription drug Suncros as a sunscreen product under OTC.
Another domestic rival, Cipla, spun off its consumer health business to Cipla Health, a joint venture subsidiary with private equity firm Eight Roads Ventures India. It is now aiming to build five Rs 100-crore brands in five years by tapping into the growing health and wellness consciousness among urban population. “For long, the OTC segment was largely dominated by multinational corporations. But with increasing competition in the branded generics space, Indian companies are also getting aggressive in the OTC space now,” said Sriram Shrinivasan, partner and global leader for generics, EY.