Chemistry of consolidation

Mumbai, Dec. 26: Nicholas Piramal India has bought out the 50 per cent stake held by Ambalal Sarabhai Enterprises in joint venture Sarabhai Piramal Pharmaceuticals (SPPL) for a consideration of Rs 69.3 crore.

The acquisition, which is in line with Nicholas Piramal’s objective of consolidating its pharmaceuticals portfolio, will elevate the company to the fourth position in the domestic pharma market with a share of around 4.4 per cent. The deal would improve Nicholas Piramal’s rank in therapeutic segments like pain management (from seventh to first position) and respiratory (from fourth to second slot).

Sarabhai Piramal, which commenced operations in 1999, posted sales of Rs 180 crore with profit after tax at Rs 17.65 crore in 2002-03.

Sarabhai Piramal has 12 leading brands, including Pentids, Esgipyrin, Tossex, Mazetol, Resteclin and Suganril. Nicholas Piramal officials said all the leading brands of Sarabhai Piramal will be a part of its portfolio.

Nicholas Piramal had invested Rs 22.5 crore in Sarabhai Piramal and received dividends aggregating Rs 24 crore till March 31, 2003, a company release said.

The profits for 2003-04 would fully accrue to Nicholas Piramal.

Nicholas Piramal said its field force would increase to 2,805 from 2,010 at present, giving it a leading edge in market reach. “The deal enhances the field force available for marketing of products of the two companies in eight therapeutic areas,” the company said.

Nicholas Piramal had earlier this year transferred its 53.8 per cent holding in its subsidiary Gujarat Glass to the Nicholas Piramal shareholders through a new holding company. The exercise was made with a view to emerge as a core pharmaceutical company. It has also been exiting from joint ventures that were not adding value to shareholders. It moved out products from Reckitt Piramal to Boots Piramal and discontinued the joint venture with Charak Pharma.