Nicholas Piramal acquires UK''s Avecia for £9.5 million

Mumbai:
27 October 2005

Mumbai: Nicholas Piramal India Limited (NPIL) has announced its second acquisition in the UK — custom manufacturer Avecia Pharmaceuticals (Sales turnover in 2004: £27.1 million), for£9.5 million. The consideration is inclusive of funding the business' UK pension fund deficit of between £8-9 million. The transaction completion is subject to required regulatory and other approvals.

This M&A transaction comes 10 months after NPIL's acquisition of Rhodia's Inhalation Anaesthetics business in December 2004. The transaction is in the nature of a share purchase on a liabilities and cash-free basis. It includes working capital of £ 8.8 million
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Avecia Pharmaceuticals is a global custom manufacturing pharma company focused on providing custom chemical synthesis and manufacturing services for the innovator pharmaceutical and biotechnology companies. Avecia had consolidated sales of £36.1 million (Rs2.9 billion) in 2004. The business includes early / late-stage and launched manufacturing assets in the UK and North America, a deep pipeline of products backed by strong customer relationships and a mix of unique technologies.

Explaining the strategic intent behind the acquisition, Ajay Piramal, chairman, Nicholas Piramal, says, "Avecia Pharmaceuticals has a long tradition of technology-driven, high-end service to the global pharmaceuticals industry, driven by highly competent specialists. The merger of this business with our custom manufacturing group will go a long way in making the combined entity a truly global custom manufacturing player."

The British drug firm is part of the UK-based Avecia Group, which was acquired by private equity funds managed by Cinven and Investcorp International in 1999 from AstraZeneca.

Nicholas Piramal's acquisition of Avecia Pharmaceuticals signifies the start of a new wave of restructuring within the global custom manufacturing industry. Manufacturers in Europe and North America, driven by their access to technologies and customers, have historically dominated this $15-billion industry. However, over the last few years, increased cost pressure and downturn in the pharma sector has put these players under pressure.

Industry analysts believe that the winning custom manufacturers of the future will have a strong manufacturing base in India with technology and early-phase beachheads in North America and Europe.