The deepening global financial crisis has forced Piramal Life Sciences (PLSL), the demerged research and development arm of pharmaceutical major Piramal Healthcare, formerly Nicholas Piramal, to defer its plans to raise funds through strategic stake sale.
"The crisis has forced us to postpone our plans. We will wait to see how things improve and will decide later. As of now, we don't require immediate funds to run the company," said Swati Piramal, director, Piramal Group.
PLSL was formed as an independent research-driven company by demerging the new drug research assets of Nicholas Piramal and was listed on the stock exchanges in May this year.
It is the second Indian drug research firm to be listed on the exchanges, after Sun Pharma's drug discovery arm Sun Pharma Advanced Research Company (SPARC).
A few months ago, MPM Capital and OrbiMed, two of the largest global healthcare funds, were reportedly negotiating with the company for a strategic stake sale. Reports had said PE funds such as MPM Capital and Kotak Private Equity Group (KPEG) and other funds such as Blackstone and Carlyle were also interested in buying a stake in PLSL."Currently we are not discussing with anyone," said Swati Piramal.
Sources said the Piramals were planning to sell about 10 per cent stake to private equity funds and then follow up with an initial public offer, sometime during the next year. Nicholas Piramal has 18 per cent stake in the new company and the rest 82 per cent is held by NPIL shareholders.
At the time of listing, NPIL was independently valued at about $500 million for its assets and a pipeline of about 14 drugs under development, including four drug candidates in clinical trial stage.
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Currently, it has seven candidate drugs in the clinical trial stage. PLSL has R&D laboratories built over 200,000 square-feet in Mumbai and over 300 scientists engaged in drug discovery and development.
Nicholas Piramal had also transferred Rs 95 crore of assets to the new company.
Meanwhile, Sagar Gokani, investment relations spokesperson for the company, said the fund raising options have not been suspended, but may only delay by three to four months.
"We are still exploring various options," he said, and added that it was not necessary to inform the shareholders, since the company had not announced any concrete plans on fund raising.
PLSL is focused on four therapeutic areas — cancer, diabetes, inflammation and infectious diseases. It has drug discovery and developments agreements with Eli Lilly and Company and Merck and Company, two of the leading global pharmaceuticals companies.
Unlike most other drug research companies in India, Nicholas Piramal plans to take forward its drugs as far as close to the commercialisation stage. The drug discovery process involves over a billion dollar investment in the West but the Piramals hope to commercialise the drug at much lesser costs using India's advantages.