Reducing risks of US business: Wockhardt chairman Khorakiwala

Three of its plants in India are under an import alert on quality compliance issues

Pharmaceutical major Wockhardt plans to produce or manufacture antibiotics and new drugs for the US market at third-party facilities and its new manufacturing plant in Dubai. This would help it reduce risk and tap opportunities worth billions of dollars, said Chairman Habil Khorakiwala.
 

The US Food and Drug Administration (FDA) has issued import alerts on three of its plants — Chikalthana, Waluj and Ankleshwar — citing quality-compliance issues. The US market accounted for more than half of its business four years back; now, it accounts for only 20%. The company’s stock had slipped 27% year on year.

Khorakiwala, however, is confident that regulatory troubles would end soon, as it is implementing remediation measures. Wockhardt’s plants were also adopting automation.

Earlier this month, the FDA approved fast tracking of Phase III clinical trials of Wockhardt’s novel antibiotic (WCK 5222). It treats a strain of pneumonia and serious infections. 

According to McKinsey’s estimate, the new drug WCK 5222 will have an annual market size of $1.5 billion in the US. 

“The trials will start in two-three months; we aim to launch it the US in four years,” Khorakiwala said. He added its manufacturing would be outsourced. 

Following regulatory setbacks, Wockhardt adopted a strategy to outsource manufacturing to third parties. About 20 key products valued $200-250 million are being produced at third-party facilities. Another novel antibiotic (WCK 4282) will be manufactured for the US market at company’s upcoming plant in Dubai.

Wockhardt’s focus on developing antibiotics to treat drug-resistant pathogens is paying off, as globally, drugmakers are grappling with issue of anti-microbial resistance. While many of its peers in India and big multinational pharmaceutical companies were investing in research in cancer and diabetes, Wockhardt focused on developing antibiotics. 

Five of Wockhardt’s under development drugs, including WCK 5222 and WCK 4282, have been selected under the FDA’s Qualified Infectious Disease Product programme, allowing faster approvals.

Khorakiwala said research and development expenses now account for around 12% of its sales and about 60-65% of spending is on developing new antibiotics. The rest was for product filings. Even in generics the company was focusing on high-value limited-competition products, he added.

“We are reducing risks in our US business. About 85% of business is not affected and we will continue to have a double-digit growth next fiscal year,” Khorakiwala said.