Novartis looking at Piramal Health pie

Swiss drug maker Novartis AG is in talks with Piramal Healthcare for a possible stake buy in the Indian company, an industry source said.

“Novartis is exploring possibilities to buy a stake in Piramal Healthcare. Officials from Novartis AG are in India and are holding talks with Piramal Healthcare officials in Mumbai,” the source said.

Shares of Piramal Healthcare rose 6% to Rs 428 on news Novartis is mulling a stake buy in the company. However, it came off the highs to close at Rs 415.95 on the BSE.
Novartis India refused to comment on the stake buy issue, calling it “market speculation”.
Piramal Group director Swati Piramal was not available on phone for comment.

Promoters hold 49.48% stake in Piramal Healthcare.

Market analysts say Piramal Healthcare is looking for a “premium” on the company’s current market price.

In earlier media reports, names of other multinational pharmaceutical companies such as Sanofi Aventis and GaxoSmithKline had come up as possible bidders for Piramal Healthcare.

Piramal Healthcare, which earns a large part of its revenues from contract manufacturing of drugs, also conducts clinical trials and has a diagnostics arm.

The company had hived off its new drug research unit into a separate subsidiary last year.
“Given pharmaceutical companies’ valuations in India, this is a good time for multinationals to make acquisitions that would not only make them formidable in the domestic market but also a leading generic drug maker in the global market,” PricewaterhouseCoopers associate director-corporate finance Sujay Shetty said.

“For a long time, multinational pharmaceutical companies have largely ignored generics, they cannot do it any longer. India is growing very fast and MNCs need to have a presence here. Also, they need to enter this market to be able to serve their home markets where there are huge concerns of public finances,” he said.

Analysts also say that after Japanese Daiichi Sankyo acquired Ranbaxy Laboratories last year, many multinationals are eyeing the Indian generic market.

“Indian companies form a strategic fit for most of the multinational companies today. They realise that they must close a deal in India today, there is no assurance for tomorrow. If they do not do it today, they may be left out,” said an analyst who feels that Novartis’ talks with Piramal Healthcare may be a result of Pfizer aggressively pursuing deals in India.