Nicholas Piramal to buy UK firm

INDIA INC SHOPS ABROAD

Signs Rs 76 crore deal with Avecia Pharmaceuticals.

Nicholas Piramal India (NPIL) has signed an acquisition deal with UK-based Avecia Pharmaceuticals for £9.5 million (nearly Rs 76 crore).

The consideration is inclusive of funding Avecia's UK pension fund deficit of £8-9 million.

This is NPIL's second M&A transaction in the UK after it bought Rhodia's inhalation anaesthetics business in December 2004. The transaction is in the nature of share purchase on liabilities and on a cash-free basis. It includes a working capital of £8.8 million.

Avecia Pharmaceuticals is a global custom pharma manufacturing player focused on providing chemical synthesis and manufacturing services for innovating drugs and biotechnology firms. In 2004, its consolidated sales were £36.1 million (Rs 290 crore).

The company has a strong product portfolio backed by strong customer relationships and a mix of unique technologies.

Avecia Pharmaceuticals is part of the UK-based Avecia Group. Private equity funds managed by Cinven and Investcorp International acquired Avecia Group from AstraZeneca in 1999.

The acquisition of Avecia Pharmaceuticals marks the beginning of a new restructuring trend in the global pharma custom manufacturing industry.

Till recently, this $15-billion industry used to be dominated by the European and North American firms with access to technologies and customers. But, over the last few years, increased cost pressure and a downturn in the pharma industry have put these players under pressure.

Industry experts believe that successful custom pharma manufacturers of the future will have a strong manufacturing base in India with technology and early-phase beachheads in North America and Europe.

The Avecia acquisition is the first step in NPIL's strategy of establishing such a winning global footprint for its custom pharma manufacturing business.

The reconfigured asset base will include access to nearly 100 early-phase assets and launched products.

NPIL has now established a significant presence in western European and North America for value-added manufacturing, with access to key technologies in chiral synthesis, fermentation, biotransformation and high potency substances. It also has access to a high-quality research and development team.

Avecia Pharmaceuticals consists of three business entities --Avecia Pharmaceuticals (APL), UK, Torcan Chemical (Torcan) in Canada and a 3. 25 per cent ownership of Reaxa Ltd (Reaxa), Manchester, UK.