Dr Reddy’s to buy part of Wockhardt India biz for Rs 1.8k cr

Hyderabad: Pharma major Dr Reddy’s Laboratories Ltd on Wednesday said it was acquiring select divisions of Wockhardt Ltd’s branded generics business in India along with a few other international territories of Nepal, Sri Lanka, Bhutan and Maldives. The deal has been struck for Rs 1,850 crore on a slump sale basis.
While Dr Reddy’s is among the top five pharma companies in the country, Wockhardt is among the top 15.While Dr Reddy’s reported a consolidated turnover of Rs 15,400 crore in 2018-19, Wockhardt posted a consolidated revenue of Rs 4,158 crore for the same fiscal.
With this, a portfolio of 62 brands in multiple therapy areas such as respiratory, neurology, VMS, dermatology, gastroenterology, pain and vaccines would transfer to Dr Reddy’s along with related sales and marketing teams. The deal also includes Wockhardt’s manufacturing plant at Baddi in Himachal Pradesh, which manufactures some of these products. The transfer will include all employees at the plant.
The two players have already inked a definitive agreement and the transaction is expected to be closed by May 12.
The India business of Dr Reddy’s contributed just 17% to the company’s consolidated turnover for 2018-19.
Commenting on the buy, GV Prasad, co-chairman and managing director of Dr Reddy’s Labs, said, “India is an important market for us and this acquisition will help in considerably scaling-up our domestic business. The acquired portfolio shall enhance Dr Reddy’s presence in the high growth therapy areas with market leading brands such as Practin, Zedex, Bro-zedex, Tryptomer and Biovac.”
Wockhardt Group founder chairman Dr Habil Khorakiwala said in a regulatory filing to the bourses, “The intended sale of business portfolio is in line with the company’s strategic plan to shift from acute therapeutic areas to more chronic businesses like anti-diabetes and CNS. We also want to focus on niche antibiotic portfolio of NCEs (new chemical entities).” The deal is expected to strengthen the company’s balance sheet.
“The divestment will also ensure adequate liquidity to bring in robust growth in the chronic domestic branded business, international operations, investments in biosimilars for the US market apart from the company's global clinical trials of break-through anti-infectives (NCEs approved under coveted QIDP1 program of USFDA) and R&D activities,” Khorakiwala explained in the statement.
Wockhardt said in a regulatory filing that the revenue from the business undertaking to be sold to Dr Reddy’s stood at Rs 594 crore for financial year 2018-19, which was 28% of Wockhardt’s total standalone revenue from operations and 14% of the total consolidated revenue of the company.
For the nine-month period ended December 31, 2019, the business clocked a revenue of Rs 377 crore, which is 34% of the total standalone revenue from operations for the period and 15% of the total consolidated revenue.