Habil F Khorakiwala’s exit as managing director of pharma major Wockhardt may have been somewhat inglorious but it is one he didn’t deserve.
True, the man who built Wockhardt, India’s seventh largest pharma company, may have been carried away by his global acquisition strategy. But his company has had its moments.
The entrepreneur who chose to drive the family’s pharmaceuticals business rather than the retail enterprise became the first in Asia to produce recombinant human insulin. The Wockhardt Biotech Park in Aurangabad, which has the capacity to cater for between 10 and 15 per cent of the world’s major biopharmaceuticals, is another example of a pharmaceutical scientist’s passion for biotechnology and his contribution to his chosen field.
Those who have worked with Khorakiwala professionally know him to be generous — Wockhardt Hospitals is one of the few medical centres, they point out, that admits emergency patients without harassing them for money. But they also point out that Khorakiwala was perhaps too much of a hands-on CEO and should have had a bigger team of professionals to help him run the business, especially after the strategy to go global was put in place.
Also, he set a pace of growth that was probably faster than necessary. When Wockhardt bought out the Paris-based Negma Laboratories in May 2007 for $265 million, after buying the Irish generics firm Pinewood for $160 million in October the previous year, it was the firm’s third acquisition in less than a year. There have been buyouts before, in Germany.
At the time it appeared as though Wockhardt would succeed in scaling up the business successfully with an increased generics presence in Europe, especially the $2 billion French generics market, and would move into the big league. After all, it had remained a fairly small company for nearly four decades — at the end of December 2006 revenues were just Rs 1,728 crore despite a strong product portfolio.
Sure enough, revenues jumped to Rs 2,653 crore in 2007 and, with the acquisition of Morton Grove in the US for $36 million, revenues are believed to have hit the Rs 3,500 crore mark at the end of December, 2008.
The direction was probably right and things might have turned out better had Wockhardt not piled up so much debt — close to Rs 3,800 crore. With the benefit of hindsight, Khorakiwala would have been better off placing out some equity rather than opting for a convertible structure that has almost brought the company to its knees. Even in the case of group company Wockhardt Hospitals it may have been wiser to have reduced the offer price and pushed through the Initial Public Offering (IPO) rather than abort it.
The CEO, who works out regularly at the gym, failed to anticipate the impact of the foreign currency exposures, possibly believing it was all under control. His misreading of the financial markets had badly hurt the company he so painstakingly nurtured and its many shareholders who believed it was on its way to becoming a stronger player.
In 2004, Khorakiwala ranked 19 on a list of 40 richest Indians and in 2006, he was ranked 746 among the richest men in the world by Forbes. Now, that wealth is almost gone and it’s up to his sons, Murtaza and Huzaifa to win it back.