Wockhardt denies sell-out talks with Pfizer on biotech business

Indian generic firm Wockhardt has denied press reports of a possible sell-out of its biotech business to the world’s largest drug maker Pfizer.

$48-billion Pfizer has been doing advanced round negotiations for a buy out or strategic alliance with Wockhardt’s biotech business, reports had said quoating anonymous banking sources engaged in due diligence process.

Pfizer would likely prefer a buy-out paying hefty premiums for Wockhardt’s Rs 100-crore biotech business, valuing it close to the Indian company’s total market value.

Wockhardt, however, denied the reports saying that it has no plant to sell out its biotech business, at the moment.

“We categorically deny any move on our part to divest the biotech business,” a spokesman for Wockhardt has stated.

Wockhardt has plans to sell some non-core assets as part of its debt restructuring efforts in which it obtained lenders approval.

Wockhardt, which is India’ sixth-largest company by sales, has recently been in news for top level restructuring as it was looking to divest of sell-out some of its assets including the biotech business to service a debt burden of about Rs 3400 crore including    the redemption of $140 million worth of foreign currency convertible bonds (FCCB).

Wockhardt has been somewhat trailing recently due to serious debt burden.

Wockhardt’s promoter and chairman, Habil Khorakiwala, had said earlier this year that the company would only rope in a global partner for a strategic alliance.

Wockhardt is perhaps the only Indian company which combined both- the conventional chemical and the biological — drug divisions.

Wockhardt has spent around $200 million in its highly promising biotech venture to bring forth  biotherapeutics such as Wosulin (recombinant human insulin), Wepox (erythropoetin) and Biovac B (hepatitis B vaccine).

Wockhardt 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.

Wockhardt is currently doing clinical studies to launch its biogeneric insulin in the US market. A couple of Wockhardt’s bio similar products are also in different stages of clinical studies in India.
Wockhardt’s manufacturing plant in Aurangabad is yet to get US FDA approval.

Wockhardt’s current market value is around Rs 1,830 crore (about $400 million).

Several multinational pharma companies find the valuations of Indian companies attractive. Recently , Sanofi Aventis bought rival French firm Merieux Alliance’s entire stake in Hyderabad-based Shantha Biotech, valuing the Indian company at $780 million.

Some of the big pharma majors including sanofi-aventis are reportedly in acquisition spree in India. These companies hope to gain access to emerging markets and cheap production, as well as to retake some of the business they’ve lost to inexpensive copycat versions of their blockbuster drugs.

Pfizer itself was  reportedly in talks with several Indian big as well as mid size drug companies has including Cadila Healthcare, Emcure, Intas Pharma and Mankind Pharma.

In May, Pfizer Inc had cut deals with Indian generic makers Aurobindo and Claris Life Sciences  acquire rights to 55 generic pills and 20 injectables for more than 70 emerging and developed markets through these two deals.

Pfizer has expanded the existing collaboration with the Hyderabad, South India-based Aurobindo Pharma Ltd reached earlier this year to sell 60 off-patent drugs. Meanwhile Pfizer’s agreement with Claris Lifesciences Ltd is to market 15 off-patent injectable drugs.

Recently, Pfizer hiked its stake from 41.23% to 75% in Pfizer India through an offer to gain a better control on its Indian business arm, which represents an emerging market.

Similarly, the world’s 2nd largest drug maker GlaxoSmithKline was doing negotiations with its Indian associate in generic drugs business Dr Reddy’s to buy a 5 percent stake, reports said in September.

In June, DRL had agreed to supply GSK with over 100 branded drugs to be sold in Africa, west Asia, Asia Pacific and Latin America.

As per agreed terms, the products will be manufactured by Dr. Reddy’s and will be licensed and supplied to GSK in various emerging markets  excluding India. Revenues will be reported by GSK and will be shared with Dr. Reddy’s . In certain markets products will be co-marketed by Dr. Reddy’s and GSK.

GlaxoSmithKline’s five percent stake in India’s second largest generic  firm Dr Reddy’s could strengthen the generic drugs deal which was forged as part of Glaxo’s Chief Executive Officer Andrew Witty’s ongoing strategy to make acquisitions and partnerships in emerging economies to offset the impact of competition from generic medicines, reports said.