Dr. Reddy’s Laboratories (DRL) will buy Wockhardt Ltd’s domestic branded business and the company’s manufacturing plant at Baddi in Himachal Pradesh for Rs. 1,850 crore. The transaction, expected to be completed by May, comprises 62 products under the branded business and related assets and liabilities, a Wockhardt press release said.
The sale proceeds will also go into strengthening the balance sheet of the company, the release said.
The business being transferred reported around Rs. 377 crore in revenue from operations for the nine-month period ended December, 2019. This is around 15% of the consolidated revenue the period. The proposed divestment is nearly 3.8 times of annualized revenue of the business being transferred. The transaction is subject to regulatory approvals.
The 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, central nervous system, etc and also to its niche antibiotic portfolio of new chemical entities, the Wockhardt release quoted its founder chairman Dr. Habil Khorakiwala as saying.
“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-infectives and R&D,” Khorakiwala said.
At 1pm on the BSE, Wockhardt share traded nearly 3% down at Rs381.75 while that of DRL was flat at Rs3,192.85.
After the deal, Wockhardt said it would continue to run all international operations in UK, USA, Ireland and other locations through its step down subsidiaries. A significant part of domestic branded business constituting chronic and speciality portfolios will continue to be run by Wockhardt.