The Hindu Business Line : Nicholas Piramal buys Avecia for Rs 76 cr

IN less than a year since its previous acquisition in the UK, the Mumbai-based Nicholas Piramal India Ltd (NPIL) has acquired the UK's Avecia Pharmaceuticals for a consideration of £9.5 million (about Rs 76 crore).

A global custom-manufacturing player, Avecia Pharmaceuticals' focus is on providing custom chemical synthesis and manufacturing services for innovator pharmaceutical and biotechnology companies.

The acquisition would complement the Indian drug-major's existing operations in custom-manufacturing, besides catapulting it onto the global stage, NPIL's Chairman, Mr Ajay Piramal, told Business Line. He expected to get regulatory approvals on the deal in about five weeks.

Elaborating on the cost efficiencies, he said, India provided a low-cost and high-quality base. The acquisition gave the company access to Avecia's customer-list and new technologies used in the synthesis of products. Besides, it provided physical proximity to the overseas client.

The reconfigured asset-base would include access to leading early phase assets, including nearly 100 early-phase and launched products, a note from the company said.

About 346 employees also come into the Nicholas Piramal fold with this deal, who would be retained, "as of now," Mr Piramal said.

Avecia Pharmaceuticals is part of the UK-based Avecia Group. Private equity funds managed by Cinven and Investcorp International acquired Avecia Group from AstraZeneca in 1999.

Avecia comprises three business entities: Avecia Pharmaceuticals Ltd (APL) in the UK, Torcan Chemical Ltd in Canada and a 25 per cent ownership of Reaxa Ltd, also in the UK. These companies clocked consolidated sales of £36.1 million in 2004.

In its first quarter of 2005, the company clocked sales of £44.1 million, with an operating loss (from continuing operations and before amortisation of goodwill and restructuring) at £12.3 million.

Explaining why the Avecia Group exited the business, he said, it was important for the group to have an "India-end or a China-end" to be successful. And for this, the company would have to invest in India and that would have been a huge process, he said.

It was advantage Nicholas Piramal, since the company had the same business model. Further, he said, Avecia's customers would feel comfortable with NPIL, as its strategy was to collaborate with multinational companies, protect intellectual property and not compete on products in the US and European markets. (This is contrary to the confrontationist strategies adopted by some Indian companies that challenge product-patents, etc)

In December 2004, Nicholas Piramal had acquired Rhodia's Inhalation Anaesthetics business, but Mr Piramal ruled out any immediate consolidation of the acquired companies in the UK.

Besides, he said, the entire manufacturing operations of the acquired Rhodia business would shift to India by November 2006. The remaining assets would remain with NPIL, he added.

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