Pune-based Bilcare has become the number one pharmaceutical packaging solutions provider in the world by acquiring the polymer films business of Ineos, the world’s third-largest chemical company. Bilcare bought the Rs 1,500-crore turnover business of Ineos a few days ago, for less than Rs 600 crore. Chairman and Managing Director Mohan Bhandari tells P B Jayakumar what the acquisition means for Bilcare. Edited excerpts:
What helped you to bag the Ineos business so cheaply?
Our negotiation team bargained hard. It was an auction and there was intense competition between two-three companies. For a $47-billion company like Ineos, this is a small business and it is difficult for them to sustain and grow it. Their focus is on the petrochemical business. It is difficult for drug makers or a company like Ineos to develop technologies and products that can keep drugs in packages intact for three years while it travels to various parts of the world. It is not their cup of tea and that is where companies like Bilcare, which specialise in drug packaging and security systems, come into the picture.
How will you benefit from this?
Bilcare had emerged among the top five players in pharmaceutical solid dosage (tablets and capsules) in the past 15 years. But I realised the next level of growth would be difficult, since 75 per cent of the global drug business is in Europe and the US. To break into that big market, we required a major asset there and this acquisition would help.
Ineos has over 1,000 clients in the US and Europe. With this acquisition, Bilcare has become the largest player in pharmaceutical packaging. Ineos employs around 1,300 people at manufacturing sites in Staufen, Botzingen, and Weissandt-Golzau in Germany, Castiglione Olona and Fucine in Italy and at Nashik and Thane in India, besides a unit at Delaware in the US. It manufactures 120 tonnes of films annually. We have facilities in India, Singapore, the US and UK. The combined business will have a turnover of over Rs 2,500 crore.
Moving manufacturing assets to India for cost reasons is a key strategy for Indian firms acquiring companies abroad. What about this one?
No, I will not do that. We will integrate the business in a phased manner, but there is no need to move production as these are high technology-based solutions, mainly software solutions. Cost saving is not a priority for me. Our mission is to ensure supply of safe and quality medicines to people globally.
How will you fund this? Are you looking at more acquisitions in future?
Mainly from internal accruals and the rest will be debt. We are a research driven company and will acquire suitable technologies in future which we feel are necessary for further growth. Our whole business is focused to mitigate five challenges faced by the drug industry. These 5Cs are compliance, counterfeiting, communication, convenience and cost.
We partner with pharmaceutical majors to ensure scientific optimisation, better shelf life, increased stability of products, ease of distribution and brand protection with significant cost reduction. We already own about 140 patents and that shows our strength as a research driven company. We provide integrated R&D consultancy and outsourcing solutions to the global pharmaceutical industry. Our products are solutions in the critical areas of brand protection, brand management technologies, clinical supplies and next generation packaging solutions. So, inorganic growth is not the priority.
What is the size of the pharmaceutical packaging industry?
It is over $2 billion business worldwide and is growing at 10-12 percent annually.
