Habil Khorakiwala resigns as Wockhardt managing director

Wockhardt’s cup of woes overfloweth

Does Khorakiwala’s exit spell more troubles for Wockhardt?

Habil Khorakiwala, whose name has become synonymous with Wockhardt has resigned from his position as managing director.

Khorakiwala’s stepping down, at a time when the company and the economies around are facing severe crisis, comes as a shocker to the entire pharma community.

Khorakiwala was at the helm of affairs for several years and none but he has been credited with for positioning the company among the top five generic players from India.

True, Wockahardt has been somewhat trailing recently due to serious  debt burden. But operative portfolios of Wockhardt has always been encouraging for the investor.

Wockhardt is perhaps the only Indian company which combined both- the conventional chemical and the biological — drug divisions. Wockhardt’s continuous efforts in biologics enabled it to bring forth  biotherapeutics such as Wosulin (recombinant human insulin), Wepox (erythropoetin) and Biovac B (hepatitis B vaccine).

It has also launched a long acting version of insulin Glargine and has reportedly been working on growth stimulating factors — a supportive therapy majorly used in cancer treatment.

However, none of the above drugs from Wockhardt’s biotherapeutics productline has become a resounding success story in the marketplace. Rather, they continue to trail behind their competitive products.

Wockhardt’s insulin, which was launched with much fanfare to grab India’s rapidly emerging insulin market, has been dogged with controversies from the beginning, including questions about the consistency of the product quality.

Maybe, the biotherapeutics portfolio is the one that inflicted the most severe blow to Wockhardt’s fast-paced growth ambitions. The company spent a good portion of its fortune to build capacities for the biotech venture, which it saw as hugely promising.

However, a greater part of Wockhardt’s debt must really have gone to fund the acquisitions it made in Europe and other overseas capitals. While 

most of the Indian generic players aspired to foray into the US market, Wockhardt went slow on  the largest and opted for the “less-crowded but more rewarding” European markets.

Among the conventional therapeutics too, Wockhardt focused on the less-competed but high yielding ones like injectables. In fact only very few companies from India has gained capabilities to produce the more challenging and technology intensive injectable drugs. Wockhardt, currently has nearly a dozen injectable drugs in the US and EU markets.

Khorakiwala successfully led Wockhardt all through these challenging trajectories. Or, in other way, he acted key in charting a course for the company through founding it on strong footholds.

But the redemption of $140 million worth of foreign currency convertible bonds (FCCB) has proved a bane for the generic major. Altogether the company is facing a debt burden of about Rs 3400 crore.

The foreign institutional investors are steadily losing their interest in Wockhardt and offloading their stakes. FIIs sold out nearly 26.2 lakh shares in the company in recent month, bringing down their  holding in the company in March 2008  to 1.54 per cent by December 31, 2008 from 3.18 per cent, a year ago.

Wockhardt has posted 21 per cent less profit at Rs 218.90 crore  for the nine-month period ended September 2008, than that of last year.

Now the company has postponed announcement of its annual audited results to April 25. Worsening the trouble, Wockhardt’s shares have also been taking a beating in the bourses, of late.

So, what’s next, Wockhardt?