My colleague Priyanka Golikeri co-authored this story appearing in DNA Money edition on Thursday, May 17, 2012.
By acquiring Decision Resources Group (DRG), a US-based healthcare information provider, for Rs3,400 crore ($635 million), Piramal Healthcare is venturing into a field where no major Indian pharma player has tread so far.
Analysts said the move to acquire a firm that provides research, consulting and analytics services, instead of a pure-play pharma player, is a big step forward into the larger healthcare spectrum.
Piramal stands to benefit from the increasing demand for drug market information as research costs are rising and approval rates for new medicines are low.
Ajay Piramal, chairman, Piramal Healthcare, said, “The need for specialist information is critical and the demand is growing. DRG’s portfolio of products is widely regarded as the gold standard of information. We will leverage our longstanding reputation and relationships with global pharma companies, our knowledge of emerging markets as well as our track record of successful acquisitions as we continue to grow further DRG’s leadership position in the healthcare information and analytics industry.”
“DRG boasts of a strong team of 290 analysts and network of 125,000 healthcare professionals. What is really impressive is the fact that 48 of the top 50 global pharmaceutical companies form part of its clientele and these aspects are worth more than value that any drugmaker could have fetched Piramal,” said an analyst from a leading brokerage.
Piramal, which sold its domestic formulations business to Abbott Labs for $3.8 billion and diagnostics business to SRL for Rs600 crore, has been scouting for investment opportunities to deploy its cash pile. DRG, one of the fastest growing firms in the $5.7 billion healthcare information firms at a 20% CAGR, provides high quality, web-enabled research, predictive analytics via proprietary databases and consulting services to the global healthcare industry.
The company’s projected revenues for the year 2012 is $160 million.
A market leader, DRG is positioned with Reed Elsevier, Gartner, Forrester Research, and acquiring such a company puts Piramal also in the same league, analysts said.
“Given DRG’s client base, the acquisition certainly works to Piramal’s advantage as they can now have an entire database at their disposal,” said Ranjit Kapadia, senior vice-president, Centrum Broking.
DRG’s business is spread across biopharma and medical technology, which automatically increases Piramal’s bandwidth, say experts. “There is an element of differentiation which acquisition of a firm like DRG brings,” said Adithya Bhat, managing director, Protiviti Consulting, adding that it is a broader channel in the healthcare industry and a smart move by Indian firm.
The acquisition, Piramal said, will be completed this quarter and funded through a mix of debt and equity in ratio of 1:1. The debt would be raised against DRG’s assets in Burlington, Massachusetts.
Piramal’s has acquired a 100% stake from private equity firm Providence Equity Partners, which had bought the company in 2007. “PE firms generally have a specific horizon for their investments in different companies and Providence was looking for an exit. I really cannot share details about the multiples being paid to acquire the controlling stake,” Piramal said when asked about DRG’s profitability and other valuation-related details.
By acquiring Decision Resources Group (DRG), a US-based healthcare information provider, for Rs3,400 crore ($635 million), Piramal Healthcare is venturing into a field where no major Indian pharma player has tread so far.
Analysts said the move to acquire a firm that provides research, consulting and analytics services, instead of a pure-play pharma player, is a big step forward into the larger healthcare spectrum.
Piramal stands to benefit from the increasing demand for drug market information as research costs are rising and approval rates for new medicines are low.
Ajay Piramal, chairman, Piramal Healthcare, said, “The need for specialist information is critical and the demand is growing. DRG’s portfolio of products is widely regarded as the gold standard of information. We will leverage our longstanding reputation and relationships with global pharma companies, our knowledge of emerging markets as well as our track record of successful acquisitions as we continue to grow further DRG’s leadership position in the healthcare information and analytics industry.”
“DRG boasts of a strong team of 290 analysts and network of 125,000 healthcare professionals. What is really impressive is the fact that 48 of the top 50 global pharmaceutical companies form part of its clientele and these aspects are worth more than value that any drugmaker could have fetched Piramal,” said an analyst from a leading brokerage.
Piramal, which sold its domestic formulations business to Abbott Labs for $3.8 billion and diagnostics business to SRL for Rs600 crore, has been scouting for investment opportunities to deploy its cash pile. DRG, one of the fastest growing firms in the $5.7 billion healthcare information firms at a 20% CAGR, provides high quality, web-enabled research, predictive analytics via proprietary databases and consulting services to the global healthcare industry.
The company’s projected revenues for the year 2012 is $160 million.
A market leader, DRG is positioned with Reed Elsevier, Gartner, Forrester Research, and acquiring such a company puts Piramal also in the same league, analysts said.
“Given DRG’s client base, the acquisition certainly works to Piramal’s advantage as they can now have an entire database at their disposal,” said Ranjit Kapadia, senior vice-president, Centrum Broking.
DRG’s business is spread across biopharma and medical technology, which automatically increases Piramal’s bandwidth, say experts. “There is an element of differentiation which acquisition of a firm like DRG brings,” said Adithya Bhat, managing director, Protiviti Consulting, adding that it is a broader channel in the healthcare industry and a smart move by Indian firm.
The acquisition, Piramal said, will be completed this quarter and funded through a mix of debt and equity in ratio of 1:1. The debt would be raised against DRG’s assets in Burlington, Massachusetts.
Piramal’s has acquired a 100% stake from private equity firm Providence Equity Partners, which had bought the company in 2007. “PE firms generally have a specific horizon for their investments in different companies and Providence was looking for an exit. I really cannot share details about the multiples being paid to acquire the controlling stake,” Piramal said when asked about DRG’s profitability and other valuation-related details.
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