HYDERABAD: Dr Reddy’s Laboratories (DRL) on Wednesday said it will acquire select business divisions of Wockhardt for Rs1,850 crore. The deal, expected to be completed by May, will help DRL boost its domestic business, while for the debt-ridden Wockhardt, it gives the much-needed liquidity. Its debt as on December 2019 stood at Rs2,300 crore.
As part of the transaction, Wockhardt will sell select divisions of its branded generics business including 62 products and their line extensions, along with related business assets and liabilities, contracts, permits, intellectual properties, employees and marketing, sales and distribution of the same in India, Nepal, Bhutan, Sri Lanka and Maldives to DRL. Besides, Wockhardt’s plant in Baddi, Himachal Pradesh, is also being sold to DRL with its entire manpower.
Wockhardt’s board of directors has approved the sale and the business is sold on a slump-sale basis. Since the transaction involves Wockhardt’s branded generics division comprising brands in therapy areas like respiratory, neurology, vitamins, minerals, dermatology, gastroenterology, pain and vaccines, the company believes it can focus on its niche antibiotics 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 and central nervous system, and also to its niche antibiotic portfolio of new chemical entities. The divestment will also ensure adequate liquidity to bring in robust growth in the chronic domestic branded business, international operations, and investments in biosimilars for the US market, apart from the company’s global clinical trials of breakthrough anit-infectives and R&D activities,” said Habil Khorakiwala, founder chairman, Wockhardt Group.Wockhardt will however continue with its global operations, which contributes about 72 per cent of the company’s consolidated revenue, through its step-down subsidiaries.