Wockhardt sells its German subsidiary

Debt-ridden Wockhardt Ltd today said it had sold its German subsidiary Esparma to Mova GmbH, a subsidiary of German drug major Lindopharm. Although the company did not disclose the deal size, sources said it was worth Rs 120 crore.

“Wockhardt continues to be on the growth track and this initiative is the first step towards its ongoing strategy to restructure, rationalise and optimise all of its businesses and raise fresh capital by divesting some of its smaller operations and non-core businesses,” said a press release.

Wockhardt had acquired the Esparma business in May 2004 for $11 million (Rs 50 crore) to enter the German market. Esparma has a portfolio of 135 marketing authorisations, of which 67 are in Germany, according to the Wockhardt website. The company has nine international patents and 94 trademarks. It is one of the smallest subsidiaries acquired overseas by Wockhardt, which has a debt burden of over Rs 3,400 crore and is undertaking a debt-restructuring plan currently.

Investment banking sources said Wockhardt was trying to sell some of its acquired assets. These include the Ireland-based Pinewood Laboratories it had acquired in October 2006 for $150 million and Negma Laboratories of France, which was acquired in early 2007 for $265 million. Another acquired asset, Morton Grove Pharmaceuticals in the US, which it bought in November 2007 for $38 million, was also on the block, they added.

The company has already got shareholder approval to sell its animal healthcare division, a non-core asset with a turnover of about Rs 100 crore. The group is also trying to sell off two-three hospitals or a minority stake in Wockhardt Hospitals, promoted by Wockhardt chairman Habil Khorakiwala and family, to raise about Rs 700-Rs 1,000 crore.

Industry observers said the sale of the German unit was unlikely to have much impact on the revenues of the Rs 3,593-crore Wockhardt, which earns over 50 per cent of its revenues from Europe. The German drug market has changed to become a generic-generic market from high margin branded generics market. Wockhardt’s European business grew over 30 per cent last year.

The share prices of the company nose-dived 8.38 per cent today on the Bombay Stock Exchange, to close at Rs 130.15.