PRESS RELEASE

Nicholas Piramal acquires Avecia Pharmaceuticals, UK for a consideration of GBP 9.5 million

Mumbai, India, 27 October 2005: Nicholas Piramal India Limited (NPIL) today announced the acquisition of Avecia Pharmaceuticals, UK for a consideration of GBP 9.5 million. The consideration is inclusive of funding the business’ UK pension fund deficit of between GBP 8-9 million. The transaction completion is subject to required regulatory and other approvals.

This acquisition is NPIL’s second M&A transaction in the UK after its acquisition of Rhodia’s Inhalation Anaesthetics business in December 2004. The transaction is in the nature of a share purchase on a liabilities and cash-free basis. It includes working capital of GBP 8.8 million.

Avecia Pharmaceuticals is a global custom manufacturing player focused on providing custom chemical synthesis and manufacturing services for the innovator pharmaceutical and biotechnology companies. It had consolidated Sales of GBP 36.1 million (Rs. 2.9 billion) in 2004. The business includes early/late-stage and launched manufacturing assets in UK and North America, a deep pipeline of products backed by strong customer relationships and a mix of unique technologies.

Avecia Pharmaceuticals is part of the UK-based Avecia Group. Private equity funds managed by Cinven and Investcorp International acquired Avecia Group from AstraZeneca in 1999.

The acquisition of Avecia Pharmaceuticals marks the start of a new wave of restructuring within the Global Custom Manufacturing Industry. Players in Europe and North America, driven by their access to technologies and customers, have historically dominated the US$15 billion industry. However, over the last few years, increased cost pressure and downturn in the Pharma industry has put these players under pressure. Industry Experts believe that the winning custom manufacturers of the future will have a strong manufacturing base in India with technology and early-phase beachheads in North America/Europe.

This transaction is the first step in NPIL’s strategy of establishing such a winning global footprint for its Custom Manufacturing business. The reconfigured asset base will include access to leading early phase assets, including nearly 100 early-phase and launched products.

Further, NPIL has now established significant presence in both the Western European and North American regions for value-added manufacturing, with access to key technologies in Chiral Synthesis, Fermentation, Biotransformation and High Potency Substances. It also has access to a high quality process R&D team, including 53 PhDs.

Avecia Pharmaceuticals comprises of the following business entities:

1. Avecia Pharmaceuticals Limited (“APL”), UK
2. Torcan Chemical Limited (“Torcan”), Toronto, Canada
3. 25% ownership of Reaxa Limited (“Reaxa”), Manchester, UK


Avecia Pharmaceuticals Limited:

APL registered Sales of GBP 27.1 million in 2004. It has three business divisions:

1. Early Phase Delivery Team (EPDT)
2. Pharma Products Division
3. High Potency Substances (HPS)

EPDT is centered on custom chemical synthesis and early-phase manufacturing for phase-1/phase-2 clinical phase products. The Pharma Products Division focuses on scale-up and manufacture of advanced Intermediates & APIs for phase-3 clinical phase and launched products, as well as fermentation, microbial biotransformation and enzyme products.

The High Potency Substances (HPS) Division specializes in process development, scale-up and manufacture of high-potency prostaglandins and cytotoxic APIs. It has also developed proprietary know-how on antibody-cytotoxic conjugate technology, which enables manufacture of targeted cytotoxic medicines.

Torcan Chemical Limited:

Torcan based at Aurora, Canada, registered Sales of GBP 9.0 million in 2004. The Company specializes in provision of custom synthesis for pre-clinical & early-phase clinical trials products for Biotechnology and mid-size Pharmaceutical companies. It has particularly strong reach into the emerging North American Biotechnology industry. Custom Synthesis revenue forms 70% of the Company’s revenue.

Torcan also manufactures launched low-volume/high-value niche APIs, which have progressed from Torcan’s early phase activities for its customers. API Custom Manufacturing contributes 30% to the Company’s revenue.

Reaxa Limited:

Reaxa Limited houses key new proprietary technology, developed by Avecia Pharmaceuticals in collaboration with Cambridge University over a six-year period. The technology enables encapsulation of catalysts & reagents that reduces product contamination by toxic metals and lowers effluent loading.

Commenting on the transaction, Ajay Piramal, Chairman, Nicholas Piramal, said “Avecia Pharmaceuticals has a long tradition of technology-driven, high-end service to the global pharmaceuticals industry, driven by highly competent specialists. The merger of this business with our Custom Manufacturing Group will go a long way in making the combined entity a truly global custom manufacturing player. We are confident of growing this business in the coming years, based on our combined global business development strength, technological skills and inherent India advantage”. 

For clarifications contact:

Vijay Sathye
Vice President - Investor Relations and M&A
Nicholas Piramal India Limited,
Nicholas Piramal Tower,
Ganpatrao Kadam Marg,
Lower Parel, Mumbai - 400 013,
India.
vsathye@nicholaspiramal.co.in
Mobile: +91 9821879774
Phone: +91 22 56637899
Facsmile: +91 22 24936708

Notes to editors: 

About Nicholas Piramal India Limited:
Nicholas Piramal is one of India’s largest pharmaceutical companies, with FY2005 Net Sales of Rs. 12.3 billion (US$283 million) and Profit after tax of Rs. 1.7 billion (US$ 39 million). NPIL is ranked fourth by marketshare in the Indian Pharmaceuticals market. In the global markets, it follows a strategy of partnering Innovator Companies for Custom Manufacturing, and has a policy of staying away from the Early-to-market Generics segment. NPIL also has a modern R&D Center at Mumbai, where 275 scientists work on discovery research and process innovation. 
See: www.nicholaspiramal.com

About Avecia: 
Avecia is a privately-owned specialty chemical company with locations in the UK, USA and Canada. It operates in two divisions (Biotechnology and Chemicals) where it holds leading positions in biopharmaceutical process development and manufacture, ink jet printing colorant technologies and electrophotographic applications. See: www.avecia.com

* The results in the press release are on Standalone Audited basis. Stand Alone Accounts represent results without considering Joint Venture and Subsidiaries.