After Cipla, Piramal gets into biotech

After Cipla last week acquired stake into two biotech companies, it’s now Piramal Healthcare’s turn to foray into the biotechnology sector.

The Mumbai-based company, which sold its domestic formulations business to Abbott last month, has acquired a Canada-based biotech company, BioSyntech, for C$3.9 million (Rs 17.65 crore).

Swati Piramal, director, strategic alliances and communications, said this acquisition covers the Quebec-based company’s intellectual property, land and other assets.

BioSyntech’s technology platform consists of hydro gels, which can be injected or applied to a specified area and can repair damaged cartilage, bone. “It is mainly for arthritis and provides the benefit of avoiding surgery,” Piramal said.

In 2005, Piramal had invested Rs 22 crore in BioSyntech by subscribing to common shares, as according to Swati Piramal, the technologies were believed to be promising.

However, BioSyntech ran out of money during the phase III trials (trials for the medicine on 1,000-3,000 patients) and went into bankruptcy and sought protection under the Bankruptcy and
Insolvency Act in May this year, following which offers were sought for sale of the company’s assets, which Piramal bid successfully.

“We would require a further Rs 35 crore for completion of the trials and bringing the product to the market. The production, manufacturing, trials would happen in India at a cheaper rate,” said Piramal.

Industry experts say the deals by Piramal and Cipla would mark a dynamic trend in India, wherein players with very little or zero presence in biotech would start making big forays.

According to industry estimates, the country’s biotech industry grew by 17% to $3 billion during 2009-10 compared with the previous fiscal, with the bio-pharma market contributing to majority of growth.

The market for biologics, which on an average cost 20 times more than chemical medicines, is worth $60 billion in the US, $30 billion in the EU and about $5 billion in the rest of the world.

“All those who have the financial and technological wherewithal will make entries into biopharma. Though at present in India, biotech is on the fringes, some 10-15 years later it would grow to become a force to reckon with,” said Muralidharan Nair, partner, life sciences practice, Ernst &Young.

However, compared with chemical medicines, biotech drugs are more technology and research intensive with high chances of failure, tougher to get regulatory approvals and require cold chain facilities for storage and distribution, which all add up to the costs, said Sarabjit Kour Nangra, vice-president, research, Angel Broking. “But those players who can manage all these factors will reap rich benefits.”