When Indian pharmas suddenly appeared to have lost interest in foreign assets, 
Wockhardt has surfaced from the shadows. And with great pride, it announced a Rs.10.87 billion buy of French Pharma R&D major Negma Laboratories on May 3, 2007 – the fourth largest pharma group in France with sales of $150 million. This is the third-largest buy by an Indian pharma major.
This deal promises Wockhardt a firm footing on the high-growth French generic drug market growing at a tremendous 24%. But did Wockhardt just pulloff a blinder? Agreed that the deal promises a lot in growth to Wockhardt’s European business (which soared by a terrific 93% during 2006) and that it has pocketed an R&D expert, but can we also explain Wockhardt’s tumbling share price (which plummetted by a shocking 10.4% since May 3 to Rs.399 on May 14)? Did the bourses get some wrong signals? Sure enough, for this deal adds little to Wockhardt’s rich product basket (with 130 drugs), as elaborated by Nimish Desai, Pharma Analyst, Motilal Oswal, “Negma is a two-drug company and Wockhardt has clearly very little to gain from the deal. It will pose immense challenges during further expansion” – little to gain in lieu of a huge sum! Also the size of the French market is only valued at $2 billion – not big enough to ensure high-growth in the long term.
Finally, while the trend is of pharma firms outsourcing R&D activities, and with R&D expense filthily growing by 235.3% to touch $40 billion in 2006 (while drugs approved fell by 62.3%), surely R&D itself is not a panacea for the problems being faced by pharma firms of late. Surely ‘Wockhard’t will have to work much harder for that!
Wockhardt has surfaced from the shadows. And with great pride, it announced a Rs.10.87 billion buy of French Pharma R&D major Negma Laboratories on May 3, 2007 – the fourth largest pharma group in France with sales of $150 million. This is the third-largest buy by an Indian pharma major.This deal promises Wockhardt a firm footing on the high-growth French generic drug market growing at a tremendous 24%. But did Wockhardt just pulloff a blinder? Agreed that the deal promises a lot in growth to Wockhardt’s European business (which soared by a terrific 93% during 2006) and that it has pocketed an R&D expert, but can we also explain Wockhardt’s tumbling share price (which plummetted by a shocking 10.4% since May 3 to Rs.399 on May 14)? Did the bourses get some wrong signals? Sure enough, for this deal adds little to Wockhardt’s rich product basket (with 130 drugs), as elaborated by Nimish Desai, Pharma Analyst, Motilal Oswal, “Negma is a two-drug company and Wockhardt has clearly very little to gain from the deal. It will pose immense challenges during further expansion” – little to gain in lieu of a huge sum! Also the size of the French market is only valued at $2 billion – not big enough to ensure high-growth in the long term.
Finally, while the trend is of pharma firms outsourcing R&D activities, and with R&D expense filthily growing by 235.3% to touch $40 billion in 2006 (while drugs approved fell by 62.3%), surely R&D itself is not a panacea for the problems being faced by pharma firms of late. Surely ‘Wockhard’t will have to work much harder for that!
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Source: IIPM Editorial, 2006
An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
Read more:-
Source: IIPM Editorial, 2006
An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
Read more:-
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