Wockhardt, the fifth-largest Indian pharma company, has scored in Europe with a few major buyouts including Wallis Laboratories in the UK, CP Pharmaceuticals in Wales, and Esparma GmbH in Germany. But the US has proved harder.
Group chairman Habil Khorakiwala is in no mood to give up. In an exclusive interview with C H Unnikrishnan, he asserts that the company will turn the US market into a significant revenue earner in the near future. Excerpts:
Wockhardt has not made any major moves to acquire firms in the US.
We are looking at further investment opportunities in the US. We have been investing significantly in research to support our US business. We invest almost 9 per cent of our sales in R&D. We have also been investing significantly in creating state-of-the-art manufacturing facilities for pharmaceuticals as well as APIs (active pharmaceutical ingredients).
To accelerate our growth, it is essential that we follow a path of inorganic growth in the US as well. One would be acquisition for market access. The other objective is acquisition with a view to access newer technologies.
The US is currently our fastest growing market. We have received five approvals this year and are expecting six more during the year. Wockhardt now sells 13 products in the US, compared to five in 2005. Our strategy is to focus on complex products.
For instance, 20 pending applications of ours include nine sterile products - three cephalosporin and six non-cephalosporin injections. The latest approval that we have received - divalproex sodium - ensures delayed release of this anti-epilepsy drug. We have plans to make the US market a significant revenue earner for Wockhardt in the next three years.
In the recent years, Indian pharmaceutical firms have been focusing on Europe as well for strategic investments. What's your strategy for Europe?
Europe is Wockhardt's biggest market today. With three successful acquisitions in the UK and Germany, we are well-equipped to penetrate the growing European generics market. Wockhardt UK is the largest generic pharma company from India in the UK. We intend to grow our European business organically as well as inorganically.
What about funding these acquisitions?
We have $400 million in cash. This is adequate in the short term. However, if an opportunity for a significant size acquisition emerges, we have the approval from our shareholders to raise up to $800 million through additional equity/equity-related instruments.
What is in store in bio-pharmaceuticals?
Our scientists are capable of constructing genes and inserting them into the three well-known expression systems, namely yeast, e-coli bacteria and mammalian cells. Currently we manufacture and market Wosulin (insulin for diabetics), Wepox (erythropoietin for dialysis and cancer patients) and Biovac B (hepatitis vaccine). We will soon be introducing Wokferon (interferon alpha 2b for cancer patients). We intend to launch one product every year. Clinical trials are in progress for Glargine (long-acting insulin analogue for diabetics).
What are your fresh investment plans on the domestic front?
We are about to commission a state-of-the-art API facility in Ankleshwar. We are also establishing a SEZ on a 250-acre plot in Shendra near Aurangabad. It will house our future manufacturing and research facilities.
What have been your achievements in research?
We are among the handful of companies that have developed a promising anti-MRSA agent, a virulent infection that is attracting global attention because it has become resistant to conventional antibiotics. Our new chemical entity called WCK 771 has now entered Phase II "proof of concept" human clinical trials.
Wockhardt was one of the only two companies from India to have been invited to participate in the prestigious Gordon Research Conference held in the US in March 2006. It was for the first time in its 75-year-old history that this science conference held a dedicated session on anti-infective research.
What is your view on the proposed new drug policy?
It will be a retrograde move if it is implemented. We in the industry prefer status quo if the government cannot come up with an innovative policy. The new policy aims to raise the span of control. What it will achieve will be the opposite of what it seeks to achieve - making essential medicines available at affordable prices. India has the lowest pharma prices in the world. This was made possible because of the technical skills of our scientists and the highly competitive environment in India.
Our industry has done more to make medicines accessible to wide sections of people than any government scheme. Apart from defeating its avowed objective, the new policy will impact the ability of Indian companies to invest in R&D and retard their expansion in the global generic pharmaceutical market.
This is all the more surprising because this policy goes against the recommendations of two expert committees set up by the government.
What are the plans in the hospitals and healthcare segment?
Hospitals come under Wockhardt Hospitals Ltd, a separate unlisted company. We now have six hospitals across the country. We are about to commission a new, 400-bed multi-speciality hospital in Bangalore later this year. We are expanding our hospital complex in Nagpur.
A new heart hospital is being set up in Surat in association with Adventist Hospitals. A new grassroot, multi-speciality hospital in Kolkata is also on the cards. Wockhardt Hospitals will expand to 10 to 15 hospitals over the next few years.
