INDIA BUSINESS WORLD - APRIL - MAY 2007
The Month that was ...

PHARMA MAJOR WOCKHARDT BUYS OUT FRENCH RESEARCH FIRM

Domestic pharma major Wockhardt has become the first Indian company to acquire a non-generic, innovative over seas company with three patented products and a research base that has the potential to drive future discoveries.

The Mumbai-based company will pay $265 million for buying 100% in Paris-based Negma Laboratories, valuing it at 9.7 times its 2006 operating earnings. Negma markets products for osteoarthritis, plebtonic and hypertension therapeutic segments and recorded sales of $150 million in 2006.

The deal is significant for Wockhardt and possibly for the Indian pharma industry as it breaks the tradition of local companies targeting only generic drug producers over seas. Negma employs original research and develops what are called new chemical entities (NCE) in industry parlance.

Drug producers such as betapharm (acquired by Dr Reddy's in late 2005) or Terapia (acquired by Ranbaxy) only market generic products, which are off-patent drugs. Generic drugs are usually developed using a different manufacturing process and sold at considerably lower prices as they do not enjoy exclusivity in the market.

"This could set a trend for the rest of the industry as Wockhardt should command higher margins than other Indian players in the European market," said Awadesh Garg associate VP research, Kotak Securities.