Private Equity investments in pharma touch $400 m

Private Equity (PE) investments in the domestic healthcare and pharma industry have touched around $400 million during the first nine months of the year. This trend is set to accelerate as companies go for overseas acquisitions, hive off their R&D units, and Foreign Currency Convertible Bonds (FCCB) lose their sheen. The PE investment include Apax Partners’ $104 million fund infusion in Apollo Hospitals, IFC’s $67 million in Max Healthcare, Trinity Capital’s $31.4 million in Fortis Healthcare, ChrysCapital’s $24 million in Mankind Pharma and Kotak $10 million in Intas Biopharmaceuticals. Within the pharma sector, the companies which are into formulation and have strong R&D are likely to get the preference. But it might not be all that easy for drug companies to attract PE investment. Unlike other sectors such as hospitality, real estates, telecom or IT, the fund requirement in pharma sector is not very high and the returns are not quick. Also, the profitability can be less in the sector due to stiff competition and uncertainty in policy of prices. However, as pharma companies begin trend of hiving off their new drug discovery into separate companies, industry experts expect a slew a PE investment in these new units.


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