Sunil Shah discusses the recent acquisition of O2H by the Indian company Piramal




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Video title: Sunil Shah discusses the recent acquisition of O2H by the Indian company Piramal
Released on: May 25, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Sunil Shah, CEO of O2h
Origins and business of O2h
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BioTrinity 2011. On this show I have Sunil Shah, who is CEO of a company called O2h based in the UK, welcome.
Sunil Shah:
Thank you for inviting me.
Fintan Walton:
Sunil, your company O2h could you tell us first of all a little bit about the origins of that company, I know you are one of the founders of that business as an entrepreneur tell us what motivated you and what were the drivers for you to set this business up?
Sunil Shah:
So actually this is my second start-up, so my first start-up was (indiscernable) I was just leaving business school and at that time although had a pharma background a biotech background I wanted to give something more entrepreneurial and at that time natural thing was to do moving into that business because it was kind of dot com boom, so I started actually called up my brother who was (indiscernable) at that as I come towards the end of my MBA and I said do you fancy doing something more entrepreneurial and he said let me just think about it and he came home one day evening said ok I have quit my job what next so he actually spent the next three months bringing for different ideas, so we started our first company and then we grew it to a certain level then the dot com crash happened we worked through it, but we learnt a lot of our business lessons in the first business so even though wasn't very successful in terms of you know a financial success although it was actually high rated an eBay at one point and so it did have there some credibility, but we used a lot of those lessons that we learnt for our next business that we wanted to make a business that was back into life sciences, we wanted to make a business profitable from day one, we wanted to make a business that didn't rely on venture funding and so on.
Fintan Walton:
What there were the lessons these were the lessons that you learnt?
Sunil Shah:
These were lessons that we learnt.
Fintan Walton:
Do not do these various things, but do these various things?
Sunil Shah:
Yes exactly so we, so the next business plan we thought that we want to have a business we these rewards.
Fintan Walton:
Which is gonna be profitable, don't use VC's?
Sunil Shah:
Yes, don't lease from big large corporate you know don't lease large equipment from big corporate because repayments can kill your business later on so little things like that which you learn by actually making it.
Fintan Walton:
Just doing it?
Sunil Shah:
By actually running a business, so we set up a company called O2h and for year one we just did we knocked on doors and we just wanted to because we were so poor from the first start-up we didn't take salaries for the last year and a half or two-years so we needed to just a consulting project of various biotech's we had a few running in the US, few in the UK, we were writing business plans for UCL Biomedica(indiscernable) and we just you know started up in that way and during one of my assignments was actually as a Director of Business Development for Cambridge Biotechnology, I saw there was a lot of chemistry going into India there were lots of problems around the project management communication, we thought if we can improve up on that we would actually have quite a nice business, so we didn't want to be you know agents on (indiscernable) are only for structured India and literally we had applied our plan within a couple of weeks having the idea as we knew this was the right thing to do we went out to India we remortgaged our house the second time used that cash to actually we leased our first lab buy our first (indiscernable) take a small funding from HSBC and we got up and running and luckily one of the consultant clients we were working in the previous year which is Amicus that actually came in became our first client so we had you know a client from day one.
Fintan Walton:
So you've said you got funding from HSBC what sort of funding was that?
Sunil Shah:
We actually took a loan, debt financing and then we put our own money in and then we built the business up to about 200 people in total about 135 chemists.
Fintan Walton:
Also you are serving the, you are serving clients who are outside India and proving them with solution to their chemical synthesis problems or what was the chemistry?
Sunil Shah:
So it's medicinal chemistry but mainly synthetic chemistry and we are providing medicinal chemistry FTE's to companies in the UK, US and Japan actually one of our largest clients is in Japan and over a period of six-years now.
Fintan Walton:
So can I ask you a question what motivates you? I mean what makes you want to do that, what is it just you saw a space and you wanted to occupy it or you just wanted to make money?
Sunil Shah:
It's about, it's not about the money and that's you know one thing about entrepreneurs is never about the money that's just to show that you have achieved something.
Fintan Walton:
Yes, that's the medal?
Sunil Shah:
Its always about that's the medal to show that have been a successful entrepreneur. I've always called myself entrepreneur even when I wasn't successful and now I'm just an exit entrepreneur so a successful entrepreneur, but it's never been about the money it's about growing and building something that you can be proud of and building a business and for some people like a doctor might be saving the patients life's for me as a business man it's about you know creating a company that is a best of it way does in the area that works its really about being best in the world in what we do and it was always our vision to be the best in what we do and we knew then the financials will take care of itself.
Acquisition by Piramal
Fintan Walton:
Sure, so clearly that was successful but of course now O2h has been acquired by the Indian company Piramal [PharmaDeals ID = 40714], could you just tell us about what actually happened there did you go out to sell the company, where you approached, did you already have a relationship with Piramal what drove that deal together?
Sunil Shah:
So we never grew the business with an exit in mind, we literally grew the business to be to run as a proper business to make it profit and to grow as if we are gonna do this till our old age and probably knew if we did that and the right business fundamentals will be there then exit would probably come along so we were open to when someone did approach us. So we were actually approached by another Indian company and through the negotiations process which was very lengthy we were then approached by Piramal at a later stage as a fact and we took that deal forward very quickly then they made initially start to finish within 10 weeks and there was a very easy transaction to do, they are very good company to do business with I would say.
Fintan Walton:
O2h is now obviously part of Piramal has that changed the culture at all at O2h?
Sunil Shah:
Well O2h has been kept as a separate company within the Piramal Group, so we run the business in a way that we've run it in the past we has been successful, but it's you know hard to hide the fact that Piramal are a very successful Indian company they as a background to Piramal they sold their generics arm of their business in June last year for about $3.8 billion to Abbott [PharmaDeals ID = 36100] and so they are very cash rich company a very exquisite company and it's hard not to get caught up in that mind set as well and it's a whole new learning for me to be part of a successful Indian corporate it's a quite enjoying experience, I am getting involved in some other things that they are doing ultimately I've got to run O2h and anyway I have been doing it in past.
Fintan Walton:
Right, and once an entrepreneur always an entrepreneur?
Sunil Shah:
Absolutely yes.
Future plans
Fintan Walton:
So obviously you want to continue to work with Piramal for a time but are you looking forward to the next challenge?
Sunil Shah:
Yes, but the next challenge could come with Piramal for example you know we could do a joint venture together we can do something where we have an equity position in something that we are doing together, so you know we leave all options open.
Fintan Walton:
You see that relationship continuing some to some extent?
Sunil Shah:
Yes we see that may be in three-years time or five-years time we could do something else together. So for us it's just by doing a good job on O2h for Piramal and then in a few years time to see what else we can do together.
Sunil's advice to budding entrereneurs
Fintan Walton:
And what advice would you give to any budding entrepreneur having gone through what you've just gone through?
Sunil Shah:
It's a very good question, the advice would be around you know you stick at it, it is a lot of hard work and you think sometimes that you are not going to quite make it all, what if this happens you know you just got to actually stick to what you do stay focused and put the graph to do you know being entrepreneur is incredibly hard work it's not all sexy about meetings you know so and so say VC and that there is a lot of grind involved and you got to prepared to put in the hard work.
Fintan Walton:
Self believe?
Sunil Shah:
Yes obviously you have to believe in yourselves you need a good teammate, so my teammate was my brother Prashant, so I could do the deals and Prashant would deliver them and that's how we worked. So he worked on the operational level and I worked at the business development level, but that you need that kind of trust obviously as brothers we have that level of trust and we can make decisions very quickly because we had just two of us really.
Fintan Walton:
But then also being a manager and as an entrepreneur how did you find managing people?
Sunil Shah:
So I leave all the managing people to Prashant, that's a difficult scale yes I just do the business.
Fintan Walton:
Sunil Shah, thank you very much indeed for coming on the show.
Sunil Shah:
It's a pleasure.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Sunil Shah
CEO
Sunil Shah is the CEO of O2h. He was previously the Director of Business Development at Cambridge Biotechnology (now Biovitrum). He has consulted into a range of biotechnology companies and major pharmaceuticals such as Pfizer, GSK, and BASF via Private consulting and the Life Sciences group of PA-Consulting. Prior to co-founding O2h, he was the co-founder and Director of a technology company. The Non Executive board positions he holds include those with Opal Drug Discovery Ltd and IOTA Pharmaceuticals Ltd. He holds an MBA from Cambridge University and a BSc in Biochemistry and is a member of the Royal Society of Chemistry.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
O2h
O2h is a 5 year old discovery services company co-located in Cambridge, UK and Ahmedabad, India. The Indian operations provide a high level of chemistry expertise while UK office provides project management support. Current clients of O2h include several top 20 pharmaceutical and biotechnology companies in the US, Europe and Japan. O2h adheres to the highest standards of performance with a particular emphasis on rapid interactive communications and delivery speed. Services provided by O2h include FTE-based synthetic chemistry, medicinal chemistry, computational chemistry, full services lab-units and ADME.