Wockhardt analyst meet takeaways

General outlook is positive as global reach of products expands

Analysts have come back with a positive outlook for Wockhardt’s after attending its analyst meet. Following are the highlights of the meet.

• Company expects US to be the key focus area followed by India and Europe. US accounted for 45 per cent of the company’s sales in FY12. The company believes it offers lucrative opportunities even after off-patent prospects ease. During the year Toprol-XL, a drug used in treatment of high blood pressure, accounted for 14 per cent of sales and 18 per cent of gross profit.
• Wockhardt has a pipeline of 33 pending ANDA (Abbreviated New Drug Application – an application for a US generic drug approval) of which in 10 cases the company is the first to file, and thus has a opportunity of getting a 180 day exclusivity marketing period. In five of the above mentioned cases Wockhardt is the only company to have filed an ANDA.
• In India, which accounts for 25 per cent of its sales, Wockhardt expects to grow in line with the industry. The company has doubled its marketing force to 3,000 over the last two years.
• Europe accounts for 28 per cent of its sales 80 per cent of which comes from the UK and Ireland markets. Wockhardt is ranked third in generic space and second in hospital space in UK. European market for the company is expected to grow in double digit in FY13.
• Its R&D focus is on differentiated technology-driven niche opportunities on delivery systems like injectables, sprays, modified release and is expected to provide growth visibility. Its current niche products have a very high entry barrier. R&D spend as a percentage of sales stood at 5.3 per cent which is expected to grow by 50-100 basis points in FY13.
• Beyond FY15 the company is expecting growth to be driven by insulin. Global trials for insulin is currently on and the product is expected to hit the US market in the next 3-4 years.
• Wockhardt management has given a guidance of 20 per cent topline growth (23 per cent in FY12) while at the same time expecting operating margin to remain at 30-31 per cent. Capital expenditure is likely to be around Rs 200-250 crore.
• Post inflow from divestment of nutrition business, net debt stands at around Rs 1,500 crore and has a comfortable debt equity ratio of less than one. The company has settled all disputed derivatives contracts as of March 31, 2012.