Dr Reddy's Laboratories Ltd has agreed to acquire select divisions of Wockhardt Ltd’s generics drug business in India and a few other countries for Rs 1,850 crore (about $260 million).
The business comprises a portfolio of 62 brands in multiple therapy areas such as respiratory, neurology, dermatology, gastroenterology, and pain and vaccines, the two companies said in separate statements.
Mumbai-based Wockhardt will also transfer the sales and marketing teams related to these areas to Dr Reddy's, and a manufacturing plant located at Baddi in Himachal Pradesh with all employees.
Apart from India, the deal covers Wockhardt’s operations in these divisions across Nepal, Bhutan, Sri Lanka and the Maldives. The drugmaker will continue to own all its operations in the UK, the US, Ireland and other countries as well as all other factories. It will also retain a large part of its domestic branded business constituting chronic and speciality pharmaceutical portfolios.
The portfolio on sale constituted Rs 594 crore, or 14%, of Wockhardt's consolidated revenue from operations for the year through March 2019.
GV Prasad, co-chairman and managing director at Dr Reddy's, said the acquired portfolio will boost its presence in high-growth therapy areas with market leading brands such as Practin, Zedex, Bro-zedex, Tryptomer and Biovac.
Wockhardt Group founder and chairman Habil Khorakiwala said the sale is part of its plan to shift focus from acute therapeutic areas to chronic segments like anti-diabetes and ailments of the central nervous system. The sale will also help it to focus on its niche antibiotic portfolio of new chemical entities, he added.
Besides, the transaction will help Wockhardt bring adequate liquidity for growth in international operations, invest in biosimilars for the US market, focus on research and development activities and strengthen its balance sheet.
Wockhardt had a net debt of Rs 2,913 crore at the end of March 2019, compared with Rs 2,441 crore the previous year.
The deal, which is subject to approvals, is likely to be completed by May.
Investment banking firm Moelis advised Wockhardt on the deal.
Founded in 1984, Dr Reddy’s makes active pharmaceutical ingredients, generic drugs, biosimilars and differentiated formulations. It also provides custom pharmaceutical services. Its therapeutic areas of focus include gastrointestinal, cardiovascular, diabetology, oncology and pain management.
Dr Reddy's has been active in dealmaking over the years, either buying or selling assets.
In its last major acquisition, Dr Reddy's had agreed to buy eight generic drugs in the US from Teva Pharmaceutical and Allergan Plc for $350 million (around Rs 2,350 crore) in cash in June 2016.
Last year, Dr Reddy’s agreed to sell two branded neurology products to US-based Upsher-Smith Laboratories LLC for over $110 million.