The acquisition will be funded equally through debt and equity
Piramal Healthcare Ltd. (PHL), on Wednesday, announced that it would acquire U.S.-based Decision Resources Group (DRG) for $635 million (around Rs.3,400 crore).
DRG is in the healthcare information segment and based in Massachusetts, U.S. The deal is PHL's second acquisition this quarter. A month ago, it bought Bayer Pharma's global molecular imaging research and development portfolio for an undisclosed sum.
Addressing a press conference, Ajay Piramal, Chairman, Piramal Healthcare, said, the DRG acquisition would be funded equally through debt and equity. “We will raise debt against the asset and the equity will be from India.'' Mr. Piramal expected to close the transaction by end-June 2012 and thereafter DRG would operate as a standalone business, headquartered in the U.S. DRG has 500 employees and would continue to be led by the existing management and CEO Peter Hoenigsberg.
DRG is focussed on three market segments collectively valued at around $2.5 billion. The bio-pharma business provides reports, databases and advisory services on drug utilisation trends and forecasting; the market access business provides database and analytical services that healthcare companies use to assess current and future opportunity of their products' acceptance into a market and the medical technology business provides insights and data on the medical device markets.
“DRG expects to clock revenues of $160 million in 2012 and has made seven acquisitions in the last few years. It has grown at a cumulative annual rate of 20 per cent over the last five years. Importantly, 48 of the top 50 global pharmaceutical companies are its customers and it has a retention rate of 95 per cent,'' said Mr. Piramal.
He said, “the global healthcare industry is facing several challenges, including rising research costs, lower drug approval rates, mounting regulatory pressures and increasingly complex reimbursement models. Increasing pressure on pharma companies' budgets is leading to increased outsourcing. We will leverage our relationships with global pharma companies, our knowledge of emerging markets as well as our track record of acquisitions to grow DRG both organically and inorganically.''
After selling its healthcare business to Abbott Laboratories in May 2010 PHL has been scouting for global businesses.
He said the company would now remain in its chosen areas of drug discovery, pharmaceuticals, healthcare information manage- ment, financial services and defence.