Defining the Future through Performance
For FY 2017-18 the year under review we have reported consolidated revenues of Rs3937 crore and a Profit After Tax of Rs (608) crore. Our Net Debt increased to Rs 2441crore as compared to Rs 1981 crore in FY 2016-17. Currently Net Debt to Equity Ratio is0.86 as compared to 0.59 as on March 31 2017. Our US business declined by 9% and our UKmarket declined by 1%. Our Emerging Markets business grew by 18% and our India businessde-grew by 1%. We launched 12 new products in India. We filed 1 ANDA with US FDA and havereceived 3 new approvals in FY 2017-18 with 70 ANDAs pending approval.
During the year besides subdued business sentiments for part of the yearreclassification of taxes post GST implementation in India has affected total sales. Whileour focus on cost containment and rationalisation continues to deliver its intendedpositive impact cost of on-going remedial measures and volatility in various currencieslike GBP EURO & USD has impacted profitability. Although strategic R&Dinitiatives in the global arena have been reported as expenses in the current year itmust be noted that they are in effect an investment for the future. Therefore foregoingcurrent profitability for a better future driven by our R&D focus has been ourcorporate strategy that may be viewed as a significant positive. A virtual springboardthat will catapult us to higher growth.
Shaping the Future through R&D
Wockhardt's commitment to R&D is well documented and is evident in itsindustry-leading spends on R&D as a percentage of total sales. In FY 2017-18 ourR&D expense amounted to Rs 287 crore at 7% of total sales. Total R&D spendincluding capex accounted for Rs 443 crore at 11% of total sales.
Innovation Expenses Validated: The progress and outcomes have more than justifiedthe spending on innovation. Building on our Intellectual Property (IP) base we filed 133patents this fiscal and won 75 patents taking cumulative patents filed to 3037 andpatents won to 628. Today we have 5 breakthrough
New Chemical Entities (NCEs) that have been accorded Qualified Infectious DiseaseProduct (QIDP) status by US FDA all of which have entered Phase III clinical stage. Beingdeveloped as novel antibiotics all 5 drugs are expected to significantly help the globalwar against Antimicrobial Resistance (AMR) in the near future. The progress made has beenshared presented and published through numerous posters and several presentations atindustry fora by American Society for Microbiology (ASM) the Infectious Diseases Societyof America (IDSA) European Congress of Clinical Microbiology and Infectious Diseases(ECCMID); and many articles in leading scientific journals like Antimicrobial Agents andChemotherapy Journal of Antimicrobial Chemotherapy Diagnostic Microbiology andInfectious Disease Journal of Clinical Microbiology and Journal of Medicinal Chemistry.
Collaborative Model for Drug Discovery: Wockhardt has evolved a collaborative modelfor its drug discovery programme that is designed to be time and cost effective inidentifying clinical candidates on an on-going basis. The focus on one hand is to ensuregood differentiation for WCK NCEs and on the other hand is to avoid toxicology relatedfailures and maintain high clinical viability for all clinical candidates. The modelrelies on a set of in-house discovery and preclinical developmental competencies coupledwith internal clinical study design competency. External studies are contracted to eitherrenowned Key Opinion Leaders (KOLs) or University Laboratories or well established andexperienced Contract Research Organisations (CROs) with GLP/GCP accreditation. A DrugDiscovery Governing Council comprising of global experts in the area of antibiotics drawnfrom the US and Europe critically evaluates clinical stage WCK NCEs and advises on theselection of specific clinical indications based on the limitations of currentstandard-of-care treatment options.
Our approach and philosophy to R&D is best paraphrased by eminent scientistinventor and futurist Nikola Tesla who said "The scientific man does not aim at animmediate result. His work is like that of the planter - for the future."
Strengthening the Future through Compliance
Today Wockhardt has established 14 strategically-located state-of-the-artmanufacturing facilities 11 in India and one each in the US UK and Ireland. And withabout two-thirds of our revenues coming from overseas operations regulatory approvals arecritical to our business.
We have invested significant resources in people processes training and technology toensure regulatory compliance and have made good progress. Towards this end we havebrought on board a seasoned professional with decades of rich experience to head ourQuality division worldwide and spearhead our global initiative to drive a holisticapproach to quality and compliance.
As reported earlier UK MHRA has confirmed compliance with the principles andguidelines of GMP for our manufacturing facilities at L-1 Chikalthana Aurangabad andKadaiya Daman while HPRA (Health Products Regulatory Authority) Ireland has grantedCertificate of GMP compliances to our Shendra Aurangabad facility. In the next fewmonths M-CAP a compliance improvement programme in effect since 2017 that looks at cGMP(common Good Manufacturing Practices) holistically is expected to yield positive resultsin line with our objectives of ensuring zero data integrity issues and address complianceholistically across all manufacturing facilities globally.
Building the Future through Leadership
At Wockhardt we have been attracting the best global leadership talent from some ofthe most respected companies across the world in various areas like Quality ResearchRegulatory Manufacturing Sales Marketing and several other functional roles. Our focusis on development and retention of human capital through various training programmes andcareer opportunities. This is aimed at ensuring that the organisation remains on top ofthe learning curve and is agile and future-ready to leverage various opportunities. Aspart of our development programmes we invest heavily to transform talented associatesinto mature leaders who will steer the organisation to newer heights in the years to come.Today we have in place a strong leadership team with the bandwidth to ably lead theorganisation into the future.
Energising the Future through De-Risking
Wockhardt has adopted a strategy to de-risk the business by outsourcing some keyfunctions like third party manufacturing and some components of the drug discovery anddevelopment process. This is done to gain cost and time efficiencies maintainuninterrupted supply to customers and avoid disruption due to compliance issues inmanufacturing. For example sterilising of WCK 5107 Cefepime and filing of WCK 5222 wasoutsourced to four external manufacturers and two contract testing laboratories. ProjectSURGE was initiated to outsource manufacturing of products to supply for US market. Theproduct scope was defined with 15 products identified based on their business potential.In FY 2017-18 3 new approvals for ANDAs and 5 site transfer approvals were received inthe US market by transferring technology to contract manufacturing organisations andobtaining approval from US FDA. The rest are at various stages of technology transferfiling with US FDA and awaiting approvals for already filed products.
Forging the Future through Excellence
Year after year Team Wockhardt - around 9000 people across 27 nationalities spanning6 continents worldwide - has been consistently recognised and acknowledged. Wockhardt'sjourney of excellence continues in FY 2017-18 where we have won more than 60 accolades atvarious fora for exceptional contribution by our leaders and functional heads. Notableamongst them are the Family Business Legacy' award from Essel Group received by Dr.Murtaza Khorakiwala conferred by the President of India Shri Pranab Mukherjee in thepresence of the Prime Minister of India Shri Narendra Modi; the coveted Accreditation byJoint Commission International (JCI) USA for Wockhardt Hospital South Mumbai for itspatient care patient safety and focus on continuous quality improvement; and an HonoraryDoctorate in Social Services from the International University of America Londonconferred upon Dr. Huzaifa Khorakiwala.
Ensuring the Future through CSR
For Wockhardt fulfilling its Corporate Social Responsibility is another approach tocreate a better future. Wockhardt Foundation in collaboration with various corporatepartners including Wockhardt Hospitals implements several social initiatives to improvethe quality of life of the underprivileged sections of society. They include mobilemedical services catering to remote rural areas toy libraries potable water sanitatione-learning skill development etc. all designed to help them hope for and achieve abetter tomorrow. Our endeavour of adopting 20 villages near Aurangabad under the AdarshGram Yojana is the perfect example of helping create an ideal community that isself-sufficient and self-reliant. Through our activities we manage to touch and impactover 2 million lives every year.
Finally I agree with American Founding Father and the third president of the UnitedStates Thomas Jefferson who said "I like the dreams of the future better than thehistory of the past."
My dream for the future sees Wockhardt playing a significant role in helping save livesand enhance the quality of life through our products services and social initiatives. Weare building today for a better tomorrow.
Dr. Habil Khorakiwala