Wockhardt explores new markets amid US pressure

Wockhardt Chairman Habil Khorakiwala is again looking for greener pastures. Under pressure from the US Food and Drug Administration (FDA), the pharma company has started exporting to Malaysia, Sri Lanka, Australia, Egypt, New Zealand and other countries which it classifies as rest-ofworld (ROW).

In 2005, Wockhardt started work on expanding its business across continents. Unlike most of its domestic peers, it decided to concentrate on Europe. But Khorakiwala soon realised generics lacked growth opportunities in most other European markets, barring the UK and Ireland. Wockhardt then shifted its focus to the US and aggressively funded its expansion drive. Even during the financial crisis, it filed 23 abbreviated New Drug Applications (ANDAs) with the FDA — a record among all generic Indian companies in 2008.

Subsequently, the company’s revenues soared and its business mix changed. Wockhardt’s US business contributed 41 per cent to its revenue, with growth of 78 per cent in 2011-12. In the first half of the following financial year, US revenue of ~1,081 crore accounted for 48 per cent of its global revenue.

Now, the company has reported a ~196-crore net loss for 2016-17, against a profit of ~251 crore in the previous year. The loss is largely on account of expenses incurred on remedial measures after FDA alerts. India and other emerging markets contributed to half of its revenue in the fourth quarter of 2016-17, while the US has now shrunk to 18 per cent. The company reported net sales of ~3,988 crore in 2016-17, down from ~4,461 crore in the previous year.

“We are now focusing on India and the rest-of-world market,” says Manas Datta, chief financial officer. “ROW contributes about 10 per cent to our revenue and is expected to grow in future,” says Datta.