Piramal acquisition of Ash Stevens catapults it into niche segment

PT Jyothi Datta Mumbai | Updated on January 17, 2018


Transaction will add $20 million to the topline annually

In a transaction that will bring Piramal Enterprises closer to niche, high value products, the group has agreed to acquire 100 percent stake in Michigan-based Ash Stevens Inc, a contract development and manufacturing organization (CDMO).

Piramal Enterprises will fork out $ 42.95 million (over Rs 270 crore) in addition to an earn-out consideration capped at $10 million, that would be a performance related payment later, Chairman Ajay Piramal told Business Line.

“The advantage of an acquisition like this is that it gets us into high value niche areas,” Piramal said, adding that that’s where the future is. HPAPIs (high potency active pharmaceutical ingredients) largely go into oncology products, and customers want them to be manufactured there, he explained. About 25 percent of new product approvals are in oncology (cancer-related) products.

The transaction is through Piramal Enterprises’ wholly-owned US subsidiary and it will add $ 20 million sales to the annual topline, he said. The transaction is expected to be completed by end August. About 77 people with the plant will move into the Piramal fold, he said, adding that Ash Stevens was looking to exit as it needed to bolster distribution.

About two years ago, Piramal Enterprises had acquired the Coldstream facility, and there is a synergy between the company’s plants in North America, he said.

Pharma solutions, the custom manufacturing business of Piramal Enterprises clocked revenues of Rs 575 crore in the three months ended June 30, 2016 (Q1), in line with a similar performance last year.

The company will grow the pharmaceuticals business, Piramal said, adding that more acquisitions can be expected in healthcare that included the critical care and consumer products businesses. Healthcare accounted for 48 percent of Piramal Enterprises’ Rs 1,776 crore revenue in Q1 followed by financial services (36 percent), information management (15 percent) and others.

Facility features

With over 50 years experience in contract manufacturing, Ash Stevens serves biotech, mid-size pharma, and large pharmaceutical clients worldwide. It includes over 60,000 sqft of facilities, eight chemical drug development and production laboratories, and six full-scale production areas, a Piramal note said. The company has 12 approved products in the market.

With a safety record of working with high potency anti-cancer agents and other highly potent therapeutics, its manufacturing facility in Michigan has approvals from multiple regulatory agencies including the US, European Union, Australia and Japan.

Vivek Sharma, Chief Executive of Piramal Pharma Solutions said that North America can be serviced by three local facilities - the Coldstream Labs in Kentucky for fill finish needs, the Torcan facility in Toronto for complex high value API’s and now, Ash Stevens in Michigan for HPAPIs.

“Having facilities with a differentiated platform and geographical proximity to clients are keys towards building strategic partnerships. We expect this acquisition to also be synergistic with our Antibody Drug Conjugates (ADCs) and injectable business,” he added.

Published on August 16, 2016

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