You are here: Home » Markets » News
Business Standard

Wockhardt tanks 5% after it sells domestic branded ops to Dr Reddy's Labs

The deal, which could fetch a consideration amount of Rs 1,850 crore, is expected to close in the first quarter of financial year 2020-21, Wockhardt added.

SI Reporter  |  New Delhi 

Markets
Markets

Shares of slumped as much as 5.3 per cent to Rs 347.55 on the BSE on Thursday after Dr Reddy's Laboratories entered into a definitive agreement with the company to acquire select divisions of its branded generics business.

"The Board of Directors have considered and approved the transfer of business comprising (a) 62 products and line extensions along with related business assets and liabilities, contracts, permits, intellectual properties, employees, marketing, sales and distribution of the same in the Domestic Branded Division in India, Nepal, Bhutan, Sri Lanka and Maldives; and (b) manufacturing facility in Baddi, Himachal Pradesh, by way of a slump sale to Dr. Reddy's Laboratories as per the terms and conditions specified in the Business Transfer Agreement," said in an exchange filing.

The deal, which could fetch a consideration amount of Rs 1,850 crore, is expected to close in the first quarter of financial year 2020-21, the company added. READ FILING HERE

At 9:42 am, the stock was trading 2.6 per cent lower at Rs 357.65 apiece, relative to a 0.21 per cent decline in the S&P BSE Sensex. About 0.96 million shares have changed hands on the counter on the NSE and BSE till the time of writing of this report. Dr Reddy's Labs, meanwhile, gained 0.7 per cent to hit a high of Rs 3,222.7 on the BSE.

In FY19, this business contributed around Rs 594 crore, or around 28 per cent of the total standalone and 14 per cent of the consolidated revenue. For the nine-month period ended December 31, the business has contributed Rs 377 crore, or around 34 per cent of the standalone and 15 per cent of the consolidated revenue from operations, said.

“The intended sale of Business portfolio is in line with the company's strategic plan to shift from acute therapeutic areas to more chronic business... The divestment will also ensure adequate liquidity to bring in robust growth in the chronic domestic branded business, international operations, investments in Biosimilars for the US market, apart from the company's Global clinical trials of breakthrough Anti-lnfectives and R&D activities,” Habil Khorakiwala, founder chairman and group chief executive officer, Wockhardt said in a statement.

DRL sees the acquisition as a strategic move to boost its domestic business. “India is an important market for us, and this acquisition will help in considerably scaling-up our domestic business. The acquired portfolio shall enhance DRL’s presence in the high growth therapy areas with market leading brands such as Practin, Zedex, Bro-zedex, Tryptomer and Biovac. We believe the portfolio holds a lot of potential and will get an impetus under DRL,” G V Prasad, co-chairman and managing director of DRL said. DRL had a turnover of nearly Rs 15,400 crore during FY19.

For the December quarter of FY20, Wockhardt reported a consolidated net profit of Rs 19.21 crore, for the first time in three years, mainly on account of improvement in operational performance and cost rationalisation. Besdies, consolidated revenue from operations came in at Rs 869.15 crore for the quarter under consideration.

DRL, on the other hand, posted a loss of Rs 569.7 crore in Q3FY20 due to impairment of non-current assets including generic Nuvaring drug. Revenue during the quarter grew 13.86 per cent YoY to Rs 4,383.8 crore, driven by growth across regions.

First Published: Thu, February 13 2020. 09:57 IST
RECOMMENDED FOR YOU