In its second overseas acquisition in about a month, Piramal Healthcare is set to buy the US-based Decision Resources Group for Rs 3,400 crore ($635 million).
This marks the Group's entry into the $5.7-billion healthcare information management business, said the Chairman, Mr Ajay Piramal. The sector is attractive since the business is built on subscriptions and has stable revenues from “sticky relationships”, he said.
The transaction is expected to close by June 30, subject to regulatory approvals, he said, adding the latest buy was likely to be the last sector the group would invest in.
Piramal Healthcare sold its domestic medicines business in 2010 to Abbott for Rs 17,000 crore and later streamlined its business, foraying into the financial services sector, besides picking up 11 per cent equity in Vodafone as a short-term investment. Last month, it acquired Bayer's molecular imaging portfolio.
With growth plans in sectors from drug discovery to defence, Mr Piramal said, “this is a range that is broad enough,” the company is not looking to get into any other sector. Growth in defence would be through new and acquired projects, he said, adding that no specific plans were in place.
Insights for risky bets
DRG is debt free and its acquisition would be funded through a combination of debt and equity. DRG provides healthcare oriented Web-enabled insights through proprietary databases and consulting services. With a compounded annual growth rate of 20 per cent over five years, DRG projects revenues of $160 million for 2012.
Explaining the importance of having analytical insights, Mr Piramal said the global regulatory environment for medicines and squeeze on funds require drug companies to make large, riskier bets, with extended paybacks..
The three market segments DRG focuses on are worth approximately $2.5 billion. They include biopharma — providing databases and advisory services on drug utilisation trends and forecasting in different therapeutic areas; market access — providing similar services to assess current and future opportunity of product acceptance; and the medical technology business — providing actionable insights on the medical device markets.