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Shashi Ashiwal

Mr Ajay Piramal, Chairman Piramal Group, and Ms Swati. A. Piramal, Director, at the Piramal Life Sciences Ltd’s listing at the BSE in Mumbai on Thursday. —

Our Bureau

Mumbai, May 29 Piramal Life Sciences Ltd (PLSL), the demerged research entity from Piramal Healthcare Ltd, made its debut on the BSE and NSE on Thursday, making it the second pharmaceutical research company to get listed, after Sun Pharma’s research arm got listed last year.

PLSL listed at Rs 300, touched an intra-day high at Rs 519.80 and low of Rs 100 before closing at Rs 316.10 on the BSE.

On the NSE, the research entity listed at Rs 391, touched an intra-day high of Rs 519 and a low of Rs 101.10 before closing at Rs 313.20.

The volatility could be because investors are uncertain on how to value a research company that is yet to have revenue projections, the Chairman, Mr Ajay Piramal, told Business Line.

With 14 prospective drug molecules in the kitty and separate drug development agreements with Eli Lilly and Merck, the new entity is in line for fresh investments, besides milestone and royalty payments from its drug deals.

Milestone payments of about $100 million are to be received by the research entity when it completes Phases I, II and III of human trials, and a percentage of royalty on sales will be received by the company upon the molecule’s launch. Similar agreements with Merck also entitle PLSL to milestone payments of up to $175 million per target, linked to progress in the development of the drug candidate, besides royalties on global sales when the product is launched.

Earlier this year, PLSL also entered into a collaboration agreement with Pierre Fabre Laboratories for research in oncology.

The Pierre Fabre Group will provide expertise in screening and research in oncology, while PLSL will make available its natural products base.

Piramal Healthcare (the erstwhile Nicholas Piramal India Ltd) had decided to demerge its innovative research with an eye on the increased funding that would be required as more molecules went into clinical trials.

PLSL would look to dilute about 10-20 per cent equity, Mr Piramal said, and a decision will be taken in the next 12 months, he added. The company also plans an investment of Rs 150-200 crore in research, including clinical trials, over the next two to three years, he said.

Piramal Healthcare would hold about 18 per cent equity in the research entity, while the promoters would hold about 41 per cent.

Shareholders will get one share of the research company for every 10 shares that it holds in NPIL. The company has also transferred Rs 90-odd crore in cash to the research arm.

PLSL’s day-one saw a total of 72.42-lakh equity shares traded on the BSE, while 83.69-lakh equity shares were traded on the NSE.

Dr Somesh Sharma will head the research entity that employs 300 people at its drug discovery and development facility at Goregaon, Mumbai.

PLSL’s board also has Dr R.A. Mashelkar, Prof Goverdhan Mehta and Sir R. Maini.

Sun Pharma’s research arm had listed last year at Rs 87.15 on the BSE and Rs 87.20 on the NSE.

On Thursday, Sun Pharma Advanced Research Company Ltd closed about two per cent down, at Rs 89.90 on the BSE.

Other companies like Ranbaxy and Wockhardt too have chosen to take a similar path, by demerging research, with plans to list.

Dr Reddy’s Laboratories’ though, cushioned its research expenses through a different model, creating an integrated drug development company.

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