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Wockhardt to sell 62 products, Baddi unit to Dr Reddy's for Rs 1850 cr

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Wockhardt will raise Rs 1,850 crore by selling part of domestic branded business, including manufacturing plant at Baddi in Himachal Pradesh, to Dr. Reddy's Laboratories (DRL).

DRL has entered into a definitive agreement with Wockhardt to acquire select divisions of its branded generics business in India and a few other international territories of Nepal, Sri Lanka, Bhutan and Maldives for a consideration of Rs 1850 crore. The business comprises of a portfolio of 62 brands in multiple therapy areas such as respiratory, neurology, VMS, dermatology, gastroenterology, pain and vaccines, which would transfer to DRL along with related sales and marketing teams; and the manufacturing plant located in Baddi, Himachal Pradesh with all plant employees. The business undertaking is being transferred on a slump sale basis.

The business being transferred reported revenue from operation of about Rs 377 crore which is about 15% of the consolidated revenue for 9 months ended 31 December 2019. The proposed divestment is approximately 3.8 times of annualized revenue of the business being transferred. The transaction is expected to be completed in May 2020, subject to requisite approvals.

The sale proceeds will go into strengthening the balance sheet of the company, Wockhardt said. The transaction will also enable Wockhardt to have adequate liquidity for robust growth in international operations and investments in biosimilars for the US market. It will also augment remaining significant domestic branded business portfolio of the company and re-focus towards chronic segment with differentiated product portfolio.

"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 like anti-diabetes, CNS etc. and also to its niche antibiotic portfolio of NCEs. 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 break-through anti-lnfectives (NCEs approved under coveted QIDP program of United States Food & Drug Administration) and R&D activities," said Dr. Habil Khorakiwala, founder chairman, Wockhardt Group.

G V Prasad, the Co-Chairman and Managing Director of Dr. Reddy's said "India is an important market for us and this acquisition will help in considerably scaling-up our domestic business. The acquired portfolio shall enhance Dr. Reddy'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 Dr. Reddy's. We welcome the team joining as part of the deal to the Dr. Reddy's family."

Shares of Wockhardt were down 3.13% at Rs 381.15. Dr. Reddy's Laboratories was down 0.03% at Rs 3189.90.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 12 2020. 12:56 IST