Mumbai: Drug maker Nicholas Piramal India Ltd said on Friday, 31 August, it would spin off its novel drug discovery research operations into a separate company in a move to restructure its research activities, sending its shares up.
Nicholas Piramal shareholders will get one share in the new company for every 10 held, a company spokesman said.
Nicholas will initially invest Rs45.5 million in the new company, and transfer the novel drug research business assets worth Rs900 million at book value and cash of Rs950 million to the new firm, he said.
On the news, Nicholas Piramal shares extended gains to touch a high of Rs264, before easing back to Rs261.30, still up 4.3%.
The new company, in which Nicholas would hold 18% and its shareholders the rest, would explore fund raising options after listing. However, a time frame for the listing on the exchanges had not yet been decided, the spokesman added.
The research unit is working on developing new molecules, including one undergoing initial stage trials as a possible cancer treatment and molecules for pain management and anti-infection which were in mid-stage trials.
The unit was also working on Eli Lilly & Co’s drug candidate for metabolic disorders in exchange for milestone payments on meeting certain targets, as part of a drug development deal with the US firm.
Top Indian drug firms Dr Reddy’s Laboratories and Sun Pharmaceutical Industries have hived off their research units, to help lower the parent’s risk exposure to high drug development costs and to unlock the value of the units.
Sun Pharma’s unit, Sun Pharma Advanced Research Co Ltd, listed on the stock exchange last month.