Biotech Values

[DewDiligence]

Glaxo Explores $1.5B Deal for India's Piramal

[GSK’s CEO, Andrew Witty, is on record as favoring “bolt on” acquisitions; this is the industry’s newest buzzword that means almost any kind of deal that doesn’t cause the buyer to have to go out and raise capital.]

http://online.wsj.com/article/SB123395213190458091.html

›FEBRUARY 7, 2009
By JEANNE WHALEN and DANA CIMILLUCA

GlaxoSmithKline PLC, which has moved aggressively into emerging markets, is in talks to buy Indian generic-drug company Piramal Healthcare Ltd. for roughly $1.5 billion, according to people familiar with the matter.

The talks are at an early stage and could still fall apart, the people said. Other drug companies have also shown an interest in Piramal, including France's Sanofi-Aventis SA, one person familiar with the matter said. Sanofi-Aventis declined to comment. Piramal couldn't be reached to comment.

As drug sales slow in mature markets such as the U.S. and Europe, Glaxo and some of its rivals are attempting to expand quickly in emerging markets, where sales in recent years have grown at a higher rate. Glaxo has spent nearly $1 billion in recent months buying emerging-market assets from rivals Bristol-Myers Squibb Co. and Belgian drug maker UCB SA. Last summer, Glaxo also signed a partnership with South Africa's Aspen Pharmacare Holdings Ltd. that will allow Glaxo to sell Aspen's drugs in a variety of emerging markets.

Piramal sells generic prescription drugs, non-prescription drugs and other products. It also sells chemical ingredients that other companies turn into drugs [i.e. API’s]. Piramal has a current market value of about $820 million. Its shares in India have fallen sharply during recent market turmoil.

India has been a hot market for drug acquisitions of late. Last year, Japan's Daiichi Sankyo Co. paid more than $4 billion for a controlling stake in India's Ranbaxy Laboratories Ltd., while Germany's Fresenius SE bought 73% of India's Dabur Pharma Ltd. for about $180 million.‹