Is pharma major Piramal Healthcare going the Ranbaxy way? Piramal Healthcare is learnt to be in talks with British pharma giant GlaxoSmithKline for a potential sale valued at nearly $1.5 billion.
It is learnt that other companies like Sanofi Aventis may also be interested in acquiring the company, and talks were at an early stage.
However, Piramal Healthcare denied any talk of a possible sale. When contacted, Piramal Healthcare director Swati Piramal told TOI, "This is totally unfounded."
She said: "We are continuously taking steps to position ourselves for growth and profitability. Piramal Healthcare continues to have a strong belief about the significant potential of our core businesses. Accordingly, we have invested in our sales force, built state-of-the-art facilities and continue to pursue acquisitions opportunistically."
Piramal Healthcare scrip closed 6.4% lower at Rs 191 on Friday on the BSE. The promoters' holding in Piramal Healthcare is 49.56%.
A significant part of the company's revenue comes from its contract manufacturing services (custom manufacturing), followed by healthcare solutions and diagnostics. Over the past year, it has been on an acquisition spree, buying selected brands of Khandelwal Labs, Minrad International, and recently, RxElite Holdings in the US.
Pharma biggies, faced with losses in developed markets like US and Europe and hit by patent expirations, are increasingly turning towards emerging markets like India because of low-cost advantage it offers for growth. To add to their woes, is the threat of affordable generic industry that is being favoured by many markets across the world to cut costs.
Glaxo chief executive Andrew Witty said recently that he is considering small acquisitions to bolster the company's business in emerging markets and nonprescription medicines. In December, GlaxoSmithKline decided to buy Bristol-Myers Squibb Pakistan Ltd and certain trademarks for around $36.5 million, adding an emerging market to its business.
GSK already has a subsidiary in India, GlaxoSmithKline Pharmaceuticals. The reported talks come after Glaxo said it would cut an unspecified number of jobs, with experts estimating approximately 10,000 layoffs, or 10% of the company's work force.
GSK's net profit fell by nearly 12%, to 4.60 billion pounds for the fiscal year ending last December, hit by the expiry of patents on drugs in US and a big drop in sales of its diabetes drug Avandia.