Nicholas Piramal to spin off R&D unit

The company said a meeting of the board of directors is scheduled to be held on Friday to consider the restructuring proposal.

If the plan is approved, the NCE research division will "de-merge" into a separated entity, a company spokesperson told Outsourcing-Pharma.com.

" We currently have three molecules in clinical trials and expect this number to be five by the end of the year, so our funding requirements will be escalating in the next few years," he said.

He added that the spin out of the unit could help Nicholas Piramal reduce risks related to drug development costs.

Indeed, such a move is intended to disburden the core company with research & development (R&D) costs.

Currently the firm devotes around 5 per cent of its total revenue - which was $600m (€439m) last year - in R&D, and over half of that is spent on the NCE research unit.

The Mumbai-based drug firm is following in the steps of its domestic rivals Dr. Reddy's Laboratories and Sun Pharmaceuticals Industries, who have both also spun out their R&D units into separate companies in the last few months.

Sun Pharma de-merged its R&D business as a separate entity last February - which formed Sun Pharma Advanced Research Company (SPARC) - in a bid to reduce R&D costs and protect margins.

The newly-formed entity was listed on the Indian Stock Exchange last month.

Dr Reddy's formed a new drug development company, Perlecan Pharma, in May 2006.

Furthermore, Ranbaxy could be the next one on the list of large Indian pharma companies to opt for a similar strategy, according to Indian media reports last week, although the firm has not confirmed the claims.

Meanwhile, both Dr Reddy's and Ranbaxy announced yesterday they were considering acquisitions, with US pharma firm Bradley Pharmaceuticals rumoured to be the one the two companies are eyeing for.

Bradley said earlier this month it had received preliminary bids for a possible sale of the company.