Wockhardt’s US biz, stock under pressure
Share of US business revenue down to 17%
Continued non-compliance with quality norms at its manufacturing units has resulted in a 66 per cent fall in Wockhardt’s US revenue over the past four years.
The drug maker is under the scanner of the US Food and Drug Administration, which has issued import alerts to three plants. The latest plant to come under the regulatory glare is at Ankleshwar, which was issued an import alert last August and a warning letter last month.
With three of its manufacturing units unable to supply to the US, the company’s revenue has taken a hit. Wockhardt’s stock, too, has come under pressure, falling 57 per cent in 2016 and underperforming the health sector index, which fell 13 per cent over the same period. In 2012-13, US business accounted for 52 per cent of Wockhardt’s operating revenue. Since then, it has been on a downward spiral. In 2015-16 US business contributed 22 per cent to operating revenue and this dropped further to 17 per cent in the first half of 2016-17. While the overall revenue is down 17 per cent, the share of US business has declined 66 per cent between FY 13 and FY16.
Wockhardt did not respond to Business Standard’s query. The Ankleshwar plant was issued an import alert last August and the warning letter issued last month was a part of the same process initiated by the FDA, the company said in a stock exchange notification on Wednesday. “The company has already initiated the required steps to address concerns raised by the FDA and is putting all its efforts to resolve the same,” Wockhardt said. “Warning letters fall into two major categories — those pertaining to good manufacturing practices and those pertaining to data integrity. Warning letters pertaining to data integrity issues take time because the FDA basically questions the correctness of the data provided, its authenticity and, most importantly, any wilful attempts to alter, manipulate or amend data,” said Jagdish Dore, managing director of Sidvim Lifesciences, a consultancy firm that prepares Indian companies for FDA inspections.
"Remediation is as much a management challenge as a technical challenge and regulators are seeking systemic improvements across facilities from companies rather than quick fixes. This process can take 12-24 months," said Vikas Bhadoria, senior partner of Mckinsey & Company.