Piramal Health: No immediate gains seen from Syntech deal

Piramal Healthcare has announced plans to acquire assets of Canada-based BioSyntech for around Rs 17.48 crore. Prior to this, Piramal had picked up a 17% equity stake in the Canadian biotech company for Rs 22.34 crore.

BioSyntech is a medical device company specialising in regenerative medicine (tissue repair) and therapeutic delivery. Before buying out Biosyntech’s assets, Piramal had exclusive rights for the marketing, sales and distribution of current and future products of BioSyntech, for India and some neighbouring Asian markets, but now it will be able to sell all the products globally. The company’s lead, late-stage product, BST-CarGel is currently undergoing an international pivotal trial. Additional funding required for this will be around Rs 35 crore. This will give Piramal access to a $500-million global market.

The other players existing in this space are Genzyme, Smith & Nephew Osteo, Biologics Inc, Arthro AG and BioTissue Technologies. BioSyntech is currently conducting a pivotal clinical trial on BST-CarGel in Canada, Spain and South Korea and this will provide a more affordable treatment alternative than the existing ones by its competitors. The company expects to hit this product in the Canadian and Indian market in another 2-3 years.

Piramal, which was left with the business worth around Rs 1,700 crore after selling its Rs 1,823-crore domestic formulations business to Abbott, was looking out for other business areas for growth. The acquisition of BioSyntech marks Piramal entry into the global market for biotech medical products estimated to be worth $90 billion. It’s a smart move considering the non-compete agreement with Abbott in the branded generics space.

But investors should not expect any immediate gains from the deal on Piramal’s business, as it will take another 2-3 years for the product to hit the market. Besides, the regenerative medicine is still at a nascent stage in India and it may take time for volumes to come in. The growth depends on how Piramal uses its strengths to scale up BioSyntech’s business in future.

Mukesh Ambani-owned Reliance Life Sciences also markets the regenerative medicine products and services such as ReliNethra, CardioRel for stem cell therapies and ReliHeal-G for tissue engineering. Other major players including Dr Reddy’s, Biocon, Glennmark Pharma and Shantha Biotech are also are trying to enter and increase their presence in this new and promising field of biotechnology products.