Scribd Logo
Upload

Welcome to Scribd!

  • 139 views

    Abbott Piramal Deal

    Uploaded by

    Akshay Aggarwal
    Abbott Laboratories sought to expand into emerging markets like India as its US market reached saturation. Piramal Healthcare, an Indian pharmaceutical company, had grown through acquisitions but faced debt issues limiting R&D. On May 21, 2010, Piramal sold its formulation business to Abbott for $3.72 billion cash. The deal gave Abbott a leading position in India's generic market and access to other emerging markets, addressing its need for growth. It acquired Piramal's 350 brands, 5,500 employees, and manufacturing plants while Piramal retained its other business divisions and paid down debt.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Abbott Piramal Deal

    Uploaded by

    Akshay Aggarwal
    139 views9 pages
    Abbott Laboratories sought to expand into emerging markets like India as its US market reached saturation. Piramal Healthcare, an Indian pharmaceutical company, had grown through acquisitions but faced debt issues limiting R&D. On May 21, 2010, Piramal sold its formulation business to Abbott for $3.72 billion cash. The deal gave Abbott a leading position in India's generic market and access to other emerging markets, addressing its need for growth. It acquired Piramal's 350 brands, 5,500 employees, and manufacturing plants while Piramal retained its other business divisions and paid down debt.

    Original Description:

    mEGER

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Abbott Laboratories sought to expand into emerging markets like India as its US market reached saturation. Piramal Healthcare, an Indian pharmaceutical company, had grown through acquisitions but faced debt issues limiting R&D. On May 21, 2010, Piramal sold its formulation business to Abbott for $3.72 billion cash. The deal gave Abbott a leading position in India's generic market and access to other emerging markets, addressing its need for growth. It acquired Piramal's 350 brands, 5,500 employees, and manufacturing plants while Piramal retained its other business divisions and paid down debt.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    139 views9 pages

    Abbott Piramal Deal

    Uploaded by

    Akshay Aggarwal
    Abbott Laboratories sought to expand into emerging markets like India as its US market reached saturation. Piramal Healthcare, an Indian pharmaceutical company, had grown through acquisitions but faced debt issues limiting R&D. On May 21, 2010, Piramal sold its formulation business to Abbott for $3.72 billion cash. The deal gave Abbott a leading position in India's generic market and access to other emerging markets, addressing its need for growth. It acquired Piramal's 350 brands, 5,500 employees, and manufacturing plants while Piramal retained its other business divisions and paid down debt.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 9

    Introduction

    Post-recession when the world was going through an economic turmoil, Abbott Laboratories USA,
    posted an increase in net income by 28%, between 2007 and 2009. However it did sense that in order to
    continue its growth cycle, it needs to expand to new markets. Though the world economy had taken a
    back seat, for few countries, especially the Emerging markets, the things were not that bad.
    India, one of the leading emerging markets, had had a marginal impact from global recession. Just as, did
    the entire world looked up to India, so did Abbott Industries. With US pharmaceutical market almost at a
    saturation stage, this pharma giant saw India as an opportunity where the company had an immense
    opportunity to grow. With this vision it was looking for opportunities to enter India, either via mean of
    acquisition or through some strategic alliance with Indian Pharma Company.
    On the other hand Indian pharma companies were at an early growth stage of their business cycle. With
    new investments being made immensely in R&D, this was majorly being financed through debt. Indian
    market also was an exponential increase in patents coming their way due to these R&D initiatives. At the
    same time there were many small and medium size pharma spanning up across the country, who were
    finding it difficult to un-tap their talents.
    Piramal Healthcare, a fully owned division of Piramal Enterprises, had grown mostly inorganically,
    acquiring 15 companies since 1988. However due to heavy debt it was unable to support its R&D, which
    is major source of potential revenues. On May 21, 2010, the management of Piramal Healthcare declared
    the execution of definitive agreements with Abbott Lab for sale of its Formulation Business to this US
    firm. Though there were some concerns raised by a few sections of stakeholders over the deal between
    the two, the decision of Piramal Healthcare to sell the Formulation Business at a high valuation was
    widely appreciated.

    Abbott Laboratories Company Profile


    Abbott Laboratories is an American pharmaceuticals and health care products company operating in over
    130 countries. The company headquarters are in Abbott Park, North Chicago, Illinois.
    International expansion began in 1931 when Abbott formed its first international office in Montreal,
    Canada. Expansion continued in 1962 when Abbott entered Japan, England, France and Italy. With all
    these developments abroad, Abbott adopted an International Division Structure. Under this organization
    of management, Abbott added another division to the three product based divisions to be responsible for
    all foreign operations. This international division is itself divided regionally, with each country reporting
    to the international management.
    The company split into three main divisions based on their products: pharmaceuticals, hospital products
    and nutritional products. The main areas of its operation are; Animal Health, Diabetic Health, Diagnosis,
    Molecular, Nutrition and Vascular.

    Piramal HealthCare Company Profile


    Piramal entered the pharmaceutical sector in 1988. Today, their services comprise pharma solutions,
    critical care, consumer products and lab-diagnostics. Piramal Healthcare contributes to over 90 percent
    of the companys revenues. The Critical Care division of the Piramal Group is one of the three players
    globally in Inhalation anesthetics.
    It provides all the currently used gases Halothane, Isoflurane, Enflurane, Sevoflurane and Desflurane.
    The product portfolio also includes Intravenous Anesthetics like Propofol, Regional Anesthetics like
    Bupivacaine, Muscle Relaxants like Atracurium and Plasma Volume Expanders like Polygeline. The
    brand portfolio under the OTC division includes Lacto calamine, I products (i-pill, i-sure, ican), Saridon, Supractive Complete, Polycrol, Tri-active, Itchmosol, Jungle Magic etc. The division
    currently services 400,000 chemists and general stores.[3] The pharma solution business unit have assets
    across North America, Europe and Asia. It offers services across the entire drug life cycle from
    development and commercial manufacturing to off-patent supplies.

    Overview of the deal


    Under this deal, the formulations Business, which deals in research, product development, drug
    formulation, manufacture, distribution & sale/marketing, import and export of generic pharmaceutical
    products in finished form, shall be transferred to Abbott Healthcare India Pvt. Limited(AHPL, a fully
    owned subsidiary of Abbott International), as a going concern. The above business transfer will involve
    the transfer of all the assets and liabilities of the current business, excluding cash and cash equivalents
    and any liability relating to indebtedness of the Company, taxes, employee and retirement claims,
    environmental or legal claims and any actual or potential litigation.
    The deal is being undertaken for an all cash consideration of $ 3.72 billion. Of the $ 3.72 billion, $ 2.12
    billion would be payable by AHPL to Piramal Healthcare on closing of the sale and a further $ 400
    million is payable at the end of each financial year, commencing in 2011.
    As per the Business Transfer Agreement, Piramal Enterprises or its affiliates are prohibited from
    engaging in business competing with the Formulation Business, either in India or in emerging markets
    for a period of eight years from the date of closing of the Business Transfer. Furthermost the above are
    also prohibited from owning an interest in, managing, operating, controlling, lending money or rendering
    consultation, as a partner, stockholder, or otherwise, with any person that is engaged in competing
    business either in India or in any Emerging Market. However this restriction does not extend to
    investment in shares of listed companies carrying on competing business, provided that such investment
    does not exceed 5% of the paid up capital and such an investment is not accompanied by acquisition of
    control or influence in the listed entity.

    Abbott Lab., USA


    USA
    India
    100%

    Piramal Group

    52.1
    47.9%
    Piramal Healthcare Pvt.
    Ltd.
    Abbott HealthCare
    Pvt. Ltd (India)

    Cash $3.72B

    Business Transfer
    May 21, 2010

    Public
    Shareholders

    What did Piramal Sell?

    Domestic formulations business


    350 brands with a Rs 2,000-crore turnover
    5,500 employees
    Manufacturing units in Baddi (HP)

    What remains unsold?

    Assets with a turnover of Rs 1,700 crore


    11 manufacturing units in four countries
    Contract manufacturing business
    Critical care business
    Bulk drug supply business
    Vitamins
    Fine chemicals
    Diagnostics and drug discovery

    What remains as a part of Piramal Enterprises?

    Glass
    Private equity
    Real estate
    Research Lab (Sold in 2015)

    What did Abbott gain?


    Abbott Lab, had been facing the pressure of its bigger rivals in the international markets. Back then it
    ranked eighth in the global pharmaceutical rankings with revenues of USD 30.7 billion in 2009, which is
    about half of industry leader Johnson & Johnson's revenues of USD 61.8 billion for the same year. In
    terms of size, scale and scope, Abbott Lab is smaller as compared to other global pharmaceutical majors.
    Acquisition of Piramals Formulation Business is expected to give Abbott Lab a better penetration into
    the emerging markets and likely to give it an edge over its mighty competitors.
    Further, just 10 days before the acquisition of the Formulation Business, Abbott Lab announced a
    licensing and supply deal with Indian pharmaceutical company Zydus Cadila. This deal allowed Abbott
    Lab to commercialize two dozen Zydus Cadila drugs in 15 emerging markets. The collaboration included
    medicines for pain, cancer and cardiovascular, neurological and respiratory diseases, with product
    launched in early 2012.

    This deal offered Abbott Lab a combined 7% market share in the Indian generic market and makes Abbott
    Lab the single largest player in the Indian pharmaceutical sector. Further, the deal provided Abbott Lab,
    the much required access to other emerging markets.

    Status post deal

    Abbott India

    PIRAMAL

    Abbott India

    PIRAMAL ENT

    Abbott India

    PIRAMAL ENT

    Abbott India

    PIRAMAL ENT

    Abbott India

    PIRAMAL

    ENT

    Abbott

    India

    PIRAMAL ENT

    You might also like