Ajay Piramal on Wednesday took the first big step towards building a global pharma company focused on original discovery and intellectual property rights by buying an American health information provider capable of analysing and predicting industry trends.
The purchase, which will cost Piramal Healthcare $635 million, will help the company’s nascent drug discovery business predict emerging trends and change its product portfolio accordingly.
The Burlington, Massachusetts based Decision Resources Group (DRG) provides proprietary research on healthcare trends, clinical research and mergers & acquisitions in the biopharma industry, competing with other analytics firms such as Forrester and Elsevier.
Piramal bought DRG from private equity firm Providence, which exited the company by selling its 100% holding. “The global healthcare industry is facing several challenges, including rising research costs, lower drug approval rates, mounting regulatory pressures and increasingly complex reimbursement models,” said Piramal, chairman, Piramal Holdings.
“The need for critical and specialist information is growing, and this business is niche with a stable revenue,” he added. DRG’s revenues for 2012 are estimated at $160 million, and it has 48 of the top 50 global pharmaceutical companies as its customers.
The US-based company’s business is divided into three parts: the biopharma business, which includes generating research data and advisory services on trends in the drug industry; the market access business, which provides analysis for pharma companies on markets suited for future drug launches; and the medical technology business, which provides insights on the medical devices industry.
The global healthcare information business is estimated to be worth $5.1 billion, but most companies offering such services are based in the US and Europe. “We will bring our relationship with leading pharmaceutical companies in India and the knowledge of emerging markets to this company,” Piramal said.
Following the sale of its domestic formulations business to Abbott Labs in 2010, Piramal Healthcare has shifted focus to niche businesses that hold intellectual property rights. “We had said earlier that we will change the idea of our pharma business. We will be moving away from branded generics to intellectual property,” Ajay Piramal said last month. In the past two months, the company has made three acquisitions. It acquired molecular imaging business of German pharma giant Bayer, which gave it access to last-stage molecule on Alzheimer’s disease. It also announced the European approval of its knee pain drug Cargel, which has the potential to generate $200 million in revenues.