Nirma Close To Sealing Core Deal

Seven months after it announced its intent to acquire ailing Ahmedabad based Core Healthcare's intravenous fluids and medical devices business, FMCG major Nirma is learnt to be close to be wrapping up the deal for a little upwards of Rs 300 crore.

For Nirma the acquisition marks not just a diversification into pharmaceutical business but also would bring tax benefits by way of accumulation of depreciation of Core's assets which could run into Rs 200-odd crore, the sources said.

The FMCG player had inked an MoU with ARCIL in December 2004 to acquire Core's business. Core had borrowed Rs 710 crore (principal) in the nineties from 23 banks and financial institutions to fund its ambitious expansion plans. It had later managed to settle Rs 110 crore worth of liabilities but around Rs 650 crore (principal) is still outstanding.

Nirma plans to acquire Core's facility spread over 600 acres, which is learnt to be operating at around 50 per cent capacity utilisation, and raked in Rs 110 crore turnover in 2004-05.

Cited as one of the major homegrown success stories in the mid nineties, Core catapulted promoter Sushil Handa into the top league of Indian entrepreneurs, but its rise to a global force in IV fluids was cut short by high cost of borrowings.

Founded by the Handa brothers - Sushil and Sunil - in 1985 with an investment of Rs 4.5 crore, Core went for an initial public offer of Rs 36 lakh in 1988 and second offering of Rs 19 crore in 1992 to fund expansions. It also issued global depository receipts of around 80 crore in 1994 at the Luxembourg Stock Exchange.

(Ref : Times of India dated 9th July 2005)

Maharashtra FDA Wrong In Insisting On US FDA Nod For Using DES : Bangalore Cardiologists

The decision of the Maharashtra FDA to insist on US FDA approval for manufacture of drug eluting stents (DES) and on trade licences from the state drug control department to market them is illogical. This will only create shortage of stents, push up prices and create a monopolistic situation in the market, according to leading cardiologists in Bangalore.

Though cardiologists said there was no uniform standard in the country to ascertain the quality and safety of medical devices, they said there was no logic in using the US FDA as a yardstick to determine the quality of stents.

"US FDA is no longer the torchbearer for certifying drugs and medical devices. If all drugs had to be US FDA certified, then more than 80 per cent of them would be off the shelves," said Dr. B. G. Muralidhara, chairman and chief cardiology, Trinity Heart Hospital Private Limited, the largest user of stents among small private hospitals in Bangalore. On an average, Trinity the 75-bedded dedicated cardiac care facility in the small private hospital segment uses between 75 and 100 stents on 60 patients a month.

The two popular stents used in India are Taxus by Boston Scientific and Cypher by Johnson & Johnson, which are both approved by US FDA. Though there is little clinical difference between these stents and those without US FDA approval, the former cost Rs 50,000 more, making them unaffordable to most Indian patients. Over 90 per cent of the stents are no US FDA approved and the impact on healthcare and the stent market will be serious. The stents also do not justify the high cost since they are primarily scaffolding devices with the mechanical aspect constituting 95 per cent of their functioning and the clinical components a mere 5 per cent.

Importantly, Dr Muralidhara said stents are used for fixing the artery after angioplasty and cannot be removed. Hence the Maharashtra FDA's contention that used stents were implanted into patients has no basis.

Cardiologists suspect the Maharashtra FDA decision could be politically motivated and has no scientific basis.

Cardiologists also opined that the move will also make it difficult to produce stents of the right length and diameter. This could force cardiologists to compromise on the quality of the procedure, averred Dr Muralidhara.

According to Dr Jay Ranganath, consultant cardiologist and pediatric cardiologist of Manipal Hospital, the Maharashtra FDA's decision will bring down non-invasive cardiac procedures by 20 per cent and there will be an increased number of surgeries like bypass and open heart. Manipal Hospital uses between 220 and 250 stents a month and is the largest user in the corporate hospital segment.

(Ref : Chronicle Pharmabiz dated June 23, 2005)