Piramal Pharma has agreed to buy 100 per cent stake in Mumbai-based Hemmo Pharmaceuticals for ₹775 crore.
The transaction through Piramal Pharma’s contract development and manufacturing organisation Piramal Pharma Solutions (PPS) will bring in a manufacturing plant in Thurbe, a research facility in Thane and 250 employees, Nandini Piramal, Chairperson, Piramal Pharma, said of the company’s third pharma acquisition this fiscal.
Acquisitions will continue to be on the radar for the consumer healthcare and prescription drug segments, she indicated, ruling out vaccine-production alliances.
Hemmo has its strengths in making peptide APIs (active pharmaceutical ingredients) and it is one of the few pure-play synthetic peptide API manufacturers, she said. While the present promoters took a decision to exit the family business, for PPS, the deal will help gain access in the peptide API market and enhance its capacity to provide integrated services to global customers, she added. There was a $2-billion opportunity in the oncology and diabetes therapies, she indicated.
The company was founded by Late J Hemrajani in 1979 and its portfolio covers over 30 APIs including generic peptides, peptide NCEs (new chemical entities) and peptides in clinical development which it offers to pharma and research companies in domestic and global markets. The company’s turnover in 2019-20 was ₹85 crore.
Rapid growth
Responding to the valuation of the acquired company, she said, “while we are not providing valuation multiples, the company is growing rapidly and is expected to continue rapid growth over the next few years. We expect the revenue to grow three times in the next few years.”
“The business is profitable with higher gross contribution and higher EBITDA margin percentages than our overall pharma business — a trend which we expect to continue and enhance especially as we experience operating leverage with the expected growth.” Despite the pandemic, the company generated 20 per cent higher revenue during the first 11 months of FY21 versus the full prior fiscal year, she added.
Last June, Piramal Enterprises had streamlined its pharma and financial businesses and divested 20 per cent in its wholly-owned subsidiary Piramal Pharma to The Carlyle Group for $490 million. Part of the funds have been used to pare debt, she indicated and added that the Hemmo transaction would be funded through the debt route.
Peter DeYoung, CEO - Pharma Solutions (Piramal Pharma), said the last decade had seen increased use of peptide drugs in oncology, diabetes and obesity. The growth in therapies for rare diseases and orphan drugs has also increased the need for peptides, he added.