The cash-rich Piramal Healthcare has closed its second deal in the past month to strengthen its pharma research and development business. The company has said it would acquire the US-based Decision Resources Group (DRG) for a consideration of nearly $635 million (Rs 3,400 crore).
DRG provides web-enabled research and consulting services to the global health care industry. It has projected a revenue of $160 million for 2012.
At present, the US-based PE major Providence Equity Partners holds a majority stake in DRG. Previously owned by private equity firms Castanea Partners and Boston Ventures Management, DRG was acquired by Providence in 2007.
With this deal, Piramal has entered the $5.7-billion global health care information management business. The transaction was expected to be closed by June 30, 2012, subject to customary regulatory approvals and closing conditions, Piramal Healthcare said in a statement. Piramal Healthcare shares on Wednesday went down 0.95 per cent to close at Rs 427 on the Bombay Stock Exchange. Barclays was the advisor on the deal.
Piramal Healthcare Chairman Ajay Piramal said, “The need for specialist information is critical and the demand is growing. DRG's portfolio of products is widely regarded as the gold standard of information.”
He said nearly 300 analysts with a strong track record in their field would be part of the acquisition. “The global health care industry is facing several challenges, including rising research costs, lower drug approval rates, mounting regulatory pressures and increasingly complex reimbursement models,” he said.
Following the completion of the acquisition, Piramal will operate DRG as a stand-alone business. The company will continue to be led by the existing senior management team.
Since the Rs 17,000-crore sale of its domestic formulation business to the US-based Abbott in September 2010, Piramal Healthcare has been expanding its pharma business, with a focus on research and development.
In April, Piramal Healthcare had entered into an agreement to acquire worldwide rights to the molecular imaging research and development portfolio of Bayer Pharma AG. As part of expanding its business into molecular imaging, Piramal Healthcare had set up a subsidiary, Piramal Imaging SA.
Piramal Healthcare invested about Rs 6,400 crore in telecom company Vodafone India to pick up about 11 per cent stake. It had also set up a financial services subsidiary, Piramal Finance, to enter the non-banking financial company space. In 2011, the group floated Piramal Systems and Technologies to foray into the defence security space.
Piramal said to a TV channel on Wednesday he was not worried about the investment made in Vodafone, as he had the option to sell it back or find a third alternative party if need be. Piramal said it would be a short-term investment, for two-three years.
