Piramal Healthcare has decided to enter the healthcare information segment by acquiring 100 per cent stake in US-based firm Decision Resources Group (DRG) for Rs 3,400 crore. DRG is a debt free firm and the transaction is expected to get over by June 30, 2012, subject to customary regulatory approvals and closing conditions.
Following the completion of the DRG acquisition, Piramal will operate DRG as a stand-alone business. The company will remain head-quartered in Burlington, MA and will continue to be led by Hoenigsberg and the existing senior management team.
Ajay Piramal, Chairman, Piramal Healthcare said, “We had sold our domestic business to Abbott Laboratories a few months back because we realised that we need to create a new business category in our company. We see a better cash flow from the healthcare information segment and DRG, which is a market leader in the US, will definitely help our business to grow further.”
After the sale of its healthcare solutions business to Abbott Laboratories in May 2010 for $3.8 billion, Piramal Healthcare has embarked on a strategy to acquire global growth businesses with sustainable returns. Commenting on the DRG acquisition, Piramal highlighted, “The global healthcare industry is facing several challenges including rising research costs, lower drug approval rates, mounting regulatory pressures and increasingly complex reimbursement models. The need for specialist information is critical and the demand is growing. DRG’s portfolio of products is widely regarded as the gold standard of information. We will leverage our long-standing reputation and relationships with global pharma companies, our knowledge of emerging markets as well as our track record of successful acquisitions as we continue to grow DRG’s leadership position in the healthcare information and analytics industry.”
He also highlighted that during the global slowdown period, DRG maintained its CAGR and resisted 20 per cent growth in 2008. The company has made a total of seven acquisitions by now and he predicts that this will certainly provide cash flow to the company.
According to Peter Hoenigsberg, Chief Executive Officer, Decision Resources Group, this is an excellent opportunity for our business, customers and employees. “Me and my team are excited to be a part of the Piramal Group and are confident that its expertise in acquiring, integrating and growing businesses will support our continued growth. Our customers have indicated that independent, objective, indispensable information from emerging markets is one of their greatest needs and Piramal’s experience in emerging markets is important since these markets are the primary avenues for growth in the pharma industry,” Hoenigsberg added.
DRG provides high quality, web enabled, predictive analytics via propriety databases and consulting services to the global healthcare industry. With 20 per cent CAGR since the last five years, it is a growing company in the $5.7 billion global healthcare information industry. The company predicts a revenue of $160 million in 2012. 48 of the top 50 global pharma companies are DRG’s customers and it has an overall customer retention rate of 95 per cent.
DRG is focused on three market segments mainly the biopharma business unit, which provides reports, databases and advisory services on drug utilisation trends and forecasting in a variety of therapeutic areas; The market access business which provides database and analytical services that healthcare companies use to assess the current and future opportunity of their products’ acceptance into a market; and finally the medical technology business which provides actionable insights and data on the medical device markets. Its products include detailed market assessments based on a specialised network of over 125,000 healthcare professionals (primarily physicians), proprietary databases of market information and detailed analytical reports on specific therapeutic areas. The three market segments that DRG covers are worth approximately $2.5 billion, leaving considerable room for DRG to continue to grow its revenues.
While signing off, Piramal said, “IMS ORG gives much more generic data whereas we will provide more in-depth research related data.”
EP News Bureau- Mumbai
