MUMBAI: Abbott, one of the largest healthcare product companies in India, has picked up an entire under-construction building with over 1.60 lakh sq ft built-up area in the Andheri suburb of Mumbai to set up an innovation & development centre, said two persons familiar with the development.
The deal assumes significance as the lease will run for over 15 years, being the first time an occupier offering commitment for such a long tenure. Also, this is for the first time, a pharmaceutical company is setting up an innovation centre in a prime locality of Mumbai or any other metropolis, while most prefer peripheral areas or tier II cities.
The built-to-suit standalone building is expected to be ready over the next one year. Abbott India will be paying monthly rental of over Rs 120 per sq ft, taking it to annual lease of over Rs 23 crore. ET’s email query to Abbott India remained unanswered until the time of going to press. Realty developer Bharat Shah, who is developing this project in MIDC Andheri, declined to comment on the story.
It may be recalled that Abbott India, in the largest office space transaction ever in terms of value, bought commercial space spread over 4.35 lakh sq ft in Godrej Properties’ project Godrej BKC in Mumbai’s Bandra-Kurla Complex for Rs 1,480 crore. In 2015, while announcing this office space buy, Abbott had reemphasized its intention to expand manufacturing capacity and R&D capability, employee development and community programmes in India.
“India is one of the most important places in the world for Abbott, and we’re investing here accordingly. We intend to be a strong, committed, and contributing part of India’s future,” Abbott chairman and CEO Miles D had said then.
Recently, in an interaction with media, Mike Warmuth, Executive VP, Established Pharmaceuticals division of Abbott, had spoken about setting up an innovation and development centre (I&D) in Mumbai. This is aimed at developing new drug formulations, new indications, dosing, packaging and other differentiated offerings to feed into its global branded generics business that clocked sales of $3.7 billion last year. The centre will act as a “hub” and ship products to at least 30 countries that will further develop the products to suit local needs, Warmuth had said.
Abbott has been part of India for more than 100 years and has a portfolio of branded generic pharmaceuticals, nutritionals, medical devices and diagnostics, and sales of over $1 billion in the country. India is among the top three countries in sales for the company, which has invested in three manufacturing facilities including Goa and Baddi for pharmaceuticals, and Jhagadia for nutrition and two R&D facilities for pharmaceuticals and nutrition segment.
The transaction shows the commercial property market in the country’s commercial capital continues to be robust. Low vacancy levels across office complexes and lack of new commercial space being ready to move is contributing to the rents firming up.
Since 2015, office space absorption across major Indian property markets has been growing on the back of combination of lower rents and a positive economic outlook, which makes it certain that the recovery this time is more sustainable and long-term in comparison with 2011. An aggressive expansion strategy adopted by many companies, particularly after the slag in the immediately preceding years, along with rising prominence of newer players in e-commerce, healthcare and technology space has been driving the recent commitments and occupancy levels.
Credits ET Realty