Dr Reddys Laboratories to acquire select business divisions of Wockhart in India

Wockhardt to sell 62 products, Baddi unit to Dr Reddy’s for Rs 1,850 crore

Wockhardt to sell 62 products, Baddi unit to Dr Reddy’s for Rs 1,850 crore

Dr Reddy's Laboratories has already declared its ambitions of growing into becoming one of the top five pharmaceutical companies in the country. 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.

The portfolio acquired by Dr Reddy's comprises of 62 brands in multiple therapy areas such as respiratory, neurology, VMS, dermatology, gastroenterology, pain and vaccines. An agreement has been signed between the two companies, by which Wockhardt will turnover its manufacturing facility in Baddi, Himachal Pradesh along with the personnel employed there. It said the business had sales of about INR 377 crore ($53 million) for the nine months that ended December 31. GV Prasad, co-chairman and managing director of Dr Reddy's, said India is an important market for the company and the deal will help the company grow its domestic business.

The acquired portfolio will enhance Dr Reddy's presence in high-growth therapy areas with brands such as Practin, Zedex, Bro-zedex, Tryptomer and Biovac, the release said. "The divestment will also ensure adequate liquidity to bring in robust growth in the chronic domestic branded business, worldwide operations, investments in biosimilars for the U.S. 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. "We welcome the team joining as part of the deal to the Dr. Reddy's family".

This transaction is expected to be completed in May 2020, subject to shareholders, lenders and other requisite approvals under applicable statutes, it said.

After the sale of this business, Wockhardt will continue to own all its global operations in UK, USA, Ireland and other locations through its step down subsidiaries; the formulation plants located at Waluj, Shendra and Chikalthana in Aurangabad, Bhimpore and Kadaiya in Daman; bulk drugs plant at Ankleshwar and manufacturing facilities at all existing worldwide locations apart from the research & development centres located at Chikalthana, Aurangabad, India and existing facilities in the global locations. "Wockhardt also has significant short and long term debt but it does not intend to use the proceeds from this transaction to pare debt, which also triggered a negative response from the investors", said Kunal Dhamesha, lead healthcare analyst at SBICAP Securities Ltd.

For Wockhardt, the deal brings in the much needed liquidity it needs to spruce up its existing business, especially the research and development for its novel antibiotic pipeline.

Shares of Dr Reddy's rose 0.49 percent and were trading at Rs 3206 on BSE at 1.15 pm, while Wockhardt declined 2.55 percent to Rs 383.40.

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