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Tatas rethink biotech as Advinus fail to secure two deals

Tata denies reports of its exit from Advinus Therapeutics, the maiden biotechnology venture of the Tata group, reports Suprotip Ghosh.

business Updated: May 02, 2007 21:13 IST

Advinus Therapeutics, the maiden biotechnology venture of the Tata group, has run into rough weather. Barely six months after Ratan Tata inaugurated its state-of-the-art research and development centre in Pune, his business conglomerate is reconsidering its Rs 123 crore stake in the Bangalore-based company.

The Tatas, however, said their commitment to the company remained. "Information about the Tata group planning to exit Advinus Therapeutics is inaccurate. The Tata group's 'interest in Advinus' remains as strong as ever," said an e-mail response from the Tata Sons quoting R Gopalakrishnan, executive director, Tata Sons.

The Tata top management is reportedly unhappy about the way Advinus has been performing over the last year, according to sources. The decision to rethink Tatas' level of participation stemmed from concerns over Advinus' tepid performance, said sources in the company.

The e-mail neither confirmed nor denied that the company had managed to garner revenues of just Rs 22.5 crore against a target of Rs 42 crore for 2006-07. Sources in the company said Tata Sons had set the revenue target internally last year.

Adding to that, Advinus failed to secure two large outsourcing deals from Bristol-Myers Squibb and Eli Lilly. The Eli Lilly deal went to Nicholas Piramal, while Bristol-Myers Squibb outsourced its research to Biocon. Bristol-Myers Squibb plans to pump in close to $300 million (Rs 1,237 crore) into India in the form of ousourcing.

The Tata group had hopes of tapping through Advinus the exponentially growing drug research outsourcing trend, in which global pharmaceuticals majors have been spending close to $65 billion (over Rs 28,000 crore) yearly.

The domestic contract research sector alone is worth around Rs 480 crore and is set to grow at 80 per cent, according to industry estimates.

Advinus was part of a restructuring operation in the Tata group two years ago, in which the Tatas transferred the knowledge services business of Rallis India, a group company, to Advinus for Rs 26 crore.

Rashmi Barbhaiya, an ex-Ranbaxy and Bristol-Myers Squibb hand, started off Advinus two years ago. The company is promoted by the Tatas, and has a programme for research into diseases of the Third World.

Attrition in the contract research and manufacturing space has also hit Advinus hard. In the last year, its chief financial officer and head of analytical R&D have left.

Box below:

$ 30 million (Rs 123 crore): Tata's stake in Advinus
Rs 22.5 crore: Advinus revenue in 2006-07
Rs 42 crore: Internal revenue target for Advinus
2: the number of key people who have left Advinus last year

First Published: May 02, 2007 21:11 IST