Piramal expects 10 per cent growth despite recession

K.T. Jagannathan

CHENNAI: Notwithstanding the spreading recession in the U.S. and Europe, custom manufacturing for global innovator-pharmaceutical firms will remain a key growth driver for Piramal Healthcare Ltd.

Asserting this, N. Santhanam, Executive Director and Chief Operating Officer of the company, said the current happenings on the global front had triggered cost-consciousness across the international innovator-pharmaceutical firms, resulting in consequential inventory correction. Nevertheless, he anticipated a 10 per cent growth in pharma solutions (custom manufacturing) business of the company, which fetched revenue of around Rs.1500 crore. Fielding a range of questions, Mr. Santhanam said since the division had partnership with only innovator-firms, it had no problems on receivables. ``They have gone in for an inventory readjustment. We also have to follow that,'' he said.

He felt that the big ticket mergers and acquisitions happening on the global pharmaceuticals field would have a beneficial fall-out on custom manufacturing companies such as Piramal Healthcare. ``It is a great time for custom manufacturing companies,'' he said. The severe pressures experienced by these global pharmaceutical companies would force them to shift their focus to sales marketing and research and development. ``They don't want to get into production,'' he pointed out. In the emerging scenario, India and China offered huge options for these firms, he said. Given the regulatory and other hassles in China, India seemed a very preferable production destinations for them, he felt. With plants in the U.K., India and Canada, Piramal Healthcare was among the top 10 custom manufacturers in the world, Mr. Santhanam said. The division was focussed on providing end-patient-oriented solutions with formulations and packaging innovations. ``This approach aims to keep the cost competitiveness of its Indian assets at the core, and then build a global outsourcing business around these assets,'' said a company release.

In an interaction here on Thursday, Mr. Santhanam said contrary to speculations Piramal Healthcare was, in fact, scouting for brand and facility acquisitions in the female healthcare space. He justified the differentiated strategy adopted by the company for the mass market. True Care, he said, was the mass market branded formulations unit of Piramal Healthcare. This was the fastest growing segment and formed around 13 per cent of the Indian pharma industry, he added. Mr. Santhanam expected this business to grow to Rs.160 crore this year from Rs. 40 core last year. This number would double in the next year or so, he added.

Piramal Healthcare, he said, had 108 diagnostic centres across the country. The plan was to add 20 to 25 in Tamil Nadu by March 2010, either through green-field or satellite routes. He said the company was already in parleys with a couple of diagnostic chains. He expected the company to firm up partnership arrangements with them very soon. THE HINDU