Piramal finds long-sought investor for $490M boost to M&A war chest

Piramal Pharma Solutions Michigan Site 2019
Piramal Pharma's recently purchased a former G&W Laboratories facility in Pennsylvania. (Piramal)

With its eyes set on making a big M&A splash, Indian drugmaker Piramal Pharma has been working for months to bring a major investor on board to fund its plans. The search is now over.

Washington, D.C.-based The Carlye Group will acquire a 20% stake in Piramal Pharma that will flush around $490 million into the Indian drugmaker's strategic war chest to fund future expansion plans, Piramal said Saturday.

Piramal Pharma, a subsidiary of Piramal Enterprises, expects to close the transaction sometime this year and plans to use the proceeds from its stake sale to help fund future deals. Piramal will consolidate all of its pharma units under the Piramal Pharma umbrella, including the Piramal Pharma Solutions CDMO as well as hospital generics and OTC units.

"This is an affirmation of the strength of our ability to build new, attractive and scalable businesses with a significant runway for continued organic growth and opportunities for consolidation," Piramal Chairman Ajay Piramal said in a release. "This infusion of funds will further strengthen our balance sheet and provide us with a war chest for the next phase of our strategy."

For Carlyle, the Piramal investment underscored the importance of the Indian market in its global portfolio.

"India is a hugely strategic part of Carlyle’s Asia business, and a market where we continue to see many attractive investment opportunities where we believe we can collaborate with management teams to drive long-term value for companies and stakeholders," Greg Zeluck, co-head of Carlyle's Asia Partners advisory team, said in a statement.

RELATED: Piramal CDMO closes in on private equity deal to raise up to $500M: report

Carlyle's major investment will bring to a close Piramal's months-long search for a major investor to underwrite the next phase of its growth plan.

Piramal Pharma had been angling for a deal for months, with Boston's TA Associates and private equity giant KKR & Co. reportedly nibbling at the hook at different points in the sale process.

Piramal Pharma maintains operations in North America, the U.K. and India, according to its website. The drugmaker offers services from preclinical development through commercial manufacturing of APIs and finished product. Its sites are approved by regulators in the U.S., Europe and Japan.

Among its North American sites is an API facility in Riverview, Michigan, that Piramal purchased in 2016 for $53 million and expanded earlier this year. It plowed $10 million into new capacity for high-potency APIs and added 50 jobs there in January.

The Michigan expansion followed a $55 million investment in API capabilities worldwide. In 2017, the CDMO shelled out that amount to upgrade manufacturing automation and IT across its entire network. That round of spending included expanding its early R&D capabilities at a site in the U.K.

RELATED: Piramal picks up former G&W oral solid dose plant in push for U.S. customers

Last week, Piramal acquired a former G&W oral solid dose plant in Sellersville, Pennsylvania, to expand its finished drug CDMO capacity on U.S. shores.

The 31.5-acre facility includes 221,000 square feet of manufacturing space, with 195,000 square feet of GMP area, Piramal said, and employs about 100 workers. Piramal will use that capacity to expand its U.S. offerings in tablets and capsules, but the Sellersville site can also churn out creams, ointments and oral liquids.

Prior to buying the Pennsylvania plant, Piramal's solid dose production was based solely in the U.K. and India, but growing demand stateside helped push the company toward producing finished products in the U.S. The CDMO is also setting up the site as the possible home for "COVID-19 management drug opportunities" in the event the U.S. government looks for more capacity.

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