Dr Reddy's to acquire Wockhardtsselect generics for Rs 1850

  • Dr Reddy's to acquire Wockhardtsselect generics for Rs 1850

Dr Reddy's to acquire Wockhardtsselect generics for Rs 1850

It will also include the manufacturing plant located at Baddi in Himachal Pradesh with all plant employees.

This is the second such India-focused business acquisition by Dr Reddy's. Dr Reddy's paid Rs 800 crore to takeover a few products from UCB's portfolio which were also meant for areas like dermatology, respiratory diseases and for treatment in pediatrics.

About Dr. Reddy's: Dr. Reddy's Laboratories Ltd. (BSE: 500124, NSE: DRREDDY, NYSE: RDY) is an integrated pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives.

The transaction, once cleared by the company's shareholders, lenders and regulatory authorities, is expected to be completed within three months of the board's approval, by 12 May, the company said in an exchange filing.

G V Prasad, the Co-Chairman and Managing Director of Dr. Reddy's said, "India is an important market for us and this acquisition will help in considerably scaling-up our domestic business".

Hyderabad-based Dr Reddy's Laboratories (DRL) is acquiring a part of the domestic branded business of Wockhardt for Rs 1,850 crore.

In FY19, this business contributed around Rs 594 crore, or around 28 per cent of the total standalone and 14 per cent of the consolidated revenue.

"Consequently, the deal bodes well for Dr Reddy's as it already has presence in some of the therapy areas that it has acquired from Wockhardt, and that would further strengthen and broaden its existing product portfolio", he added.

The transaction is expected to close in the first quarter of the financial year 2020-21.

Wockhardt said its research and development centers located at Chikalthana, Aurangabad, India and existing facilities in the global locations would also continue to be under its fold along with a significant part of domestic branded business constituting chronic and speciality portfolios. "The divestment will ensure adequate liquidity to bring in robust growth in the chronic domestic branded business, worldwide operations, investments in Biosimilars for the U.S. market apart from the company's global clinical trials of break-through anti-Infectives (NCEs approved under coveted QIDP program of United States Food & Drug Administration) and R&D activities", he said.

The Mumbai-based pharmaceutical firm continues to own all the worldwide operations in the United Kingdom, the US, Ireland and other locations through step-down subsidiaries.

In fiscal 2018-19, the promoters had infused ₹250 crore in the form of redeemable preference shares to refinance the outstanding preference debt.

For Wockhardt, the deal brings in the much needed liquidity it needs to spruce up its existing business, especially the research and development for its novel antibiotic pipeline. While Dr Reddy settled for the day on a positive note at Rs 3,205, up by almost 0.5 per cent from its previous close.