Mumbai: The over-the-counter (OTC) division of Piramal Healthcare Ltd, one of the key businesses that the company retained after divesting its flagship formulations and diagnostics services units for Rs 17,600 crore in May, is in the process of finalizing multiple acquisitions.
The objective is to grow to the next level through the inorganic route, according to a senior company executive.
The OTC division, which had sales of Rs 125 crore last fiscal, had early this year, acquired the country’s largest selling emergency contraceptive pill, i-Pill from Cipla Ltd for Rs 95 crore.
“We are identifying acquisition targets that fit into our range in terms of business segment and return on investment,” said Kedar Rajadnye, president and chief operating officer, consumer products division of Piramal Healthcare.
The firm is actively looking for acquiring established brands and companies in India and overseas, and “funding is not a constraint if the target fits into its scheme of things”, Rajadnye added.
He declined to share the size of investment and the timeframe for acquisitions, but said Ahmedabad-based OTC firm Paras Pharmaceuticals Ltd is one of the acquisition targets. “We are to complete a detailed assessment of that business in terms of final valuation and return on investment,” he said.
“We may also look at opportunities for licensing interesting products from the international markets that has some brand equity in the domestic space,” Rajadnye added.
Piramal Healthcare chairman Ajay Piramal had, in an earlier interview, said the firm will make fresh investments in its remaining businesses (after the sell-off), which include contract manufacturing of drugs, consumer health or OTC drugs, hospital-based products and drug research.
Graphic: Yogesh Kumar/Mint
The firm will also look at acquisition opportunities in the contract manufacturing space, especially in the international markets, Piramal had said.
Piramal Healthcare is one of the active players in the Rs.11,000 crore-by-sales domestic consumer healthcare market, which deals with non-prescription products in the healthcare and wellness segment. Currently, the leaders in this market are GlaxoSmithKline Consumer Healthcare Ltd and Johnson and Johnson Ltd.
Piramal Healthcare, which reaches out to around 400,000 outlets mainly in the urban and semi-urban markets with 1,200 distributors, does not have too many products that can be distributed through general stores.
Many Paras Pharma products are sold in general stores. “If the valuation matches our expectation, Paras Pharma will significantly add value to our business in terms of product range, distribution network and considerably on the revenue,” said Rajadnye.
Piramal Healthcare valued i-Pill at three times its sales in the past 12 months. Its portfolio consists of brands such as the Lacto Calamine, Saridon and Polycrol antacid.
The firm also plans to be aggressive on growing the business through the organic route. “We have interesting organic options by growing the existing products, which are predominantly urban in markets, by taking them to rural regions,” Rajadnye. said, adding the company is not planning to add products that require medical endorsement or prescription.
In the OTC business, companies spend money for product promotion through field force and advertisements. Piramal Healthcare has been making aggressive investments in promoting products.
On Tuesday, Piramal Healthcare informed the Bombay Stock Exchange that the board will consider various options to reward shareholders, including a dividend, a buy-back of equity shares, or both, in its meeting on 22 October.