Tatas foray into life sciences, buy Advinus

Tatas will invest over Rs 100 cr in the venture.

The Tata group is picking up a majority stake in Advinus Therapeutics, a pharmaceutical research company floated by former Ranbaxy Laboratories president (pharmaceuticals) Rashmi Barbhaiya.

Though it is not clear what exactly will be the Tata stake in the company, sources close to the development said the group would invest over Rs 100 crore in the venture.

"While Tata Sons will nominate the chairman of Advinus, Barbhaiya will be the company's CEO and managing director," the sources added.

As a first step, Rallis India Ltd' s knowledge services business, including research and development (R&D), will be transferred to Advinus for a consideration of Rs 26 crore.

Though it was not clear if it would be an all-cash or an all-stock deal, VS Sohoni, managing director of Rallis India, said at a press conference in a Mumbai that Rallis would have a strategic stake in Advinus.

Apart from the Tatas, Barbhaiya and Sanjiv Kaul, a management adviser with ChrysCapital, will hold a minority stake in Advinus. Barbhaiya and Kaul, it is worth remembering, had left Ranbaxy after DS Brar had quit as the company's president and managing director in December 2003 and Brian Tmpest had taken over.

In a recent interview with Business Standard, Tata Sons Chairman Ratan Tata had indicated that he was looking at investing in the area of pharmaceutical R&D. Advinus, it now turns out, is the first venture Tata Sons has decided to fund.

Advinus (Advantage+India+US) will have a R&D unit in Pune that will work in certain therapeutic areas and a drug development services facility in Bangalore (the Aventis facility).

"Though the rewards are high, the risks are high too in R&D. We want to hedge them by offering development services also," the sources said.

The development services facility will carry out pre-clinical as well as phase one clinical trials for foreign pharmaceutical companies as well as Indian drug firms. "This will save Indian companies from investing in the infrastructure required to carry out clinical trials," the sources said.

Of the 100 employees to be transferred to Advinus, 85 are trained scientific personnel.

While the Pune operations will be run by Kasim Mookhtiar, a former senior Ranbaxy scientist, the Bangalore unit will be headed by Srinivas Nagehali, a former senior vice-president with Dr Reddy's Laboratories.

Rajiv Malik has joined Advinus from Jubilant Organosys to head its commercial operations. Kaul will also be an adviser to the company.

Several Indian pharmaceutical companies are looking at setting up contract research organisations as the cost of discovering and developing a drug in the west has climbed to 800 million to $1 billion.

While at Ranbaxy, Barbhaiya had said at various platforms that Indian companies had the wherewithal to develop a drug at a fraction of these costs.