Wockhardt strengthens European presence with German acquisition

Mumbai, May 6, 2004

Pharmaceutical major Wockhardt Limited today announced the acquisition of the German pharmaceutical company esparma, GmbH. The deal, made at a consideration (equity value) of US$ 11 million (Rs. 49 crores), signals Wockhardt’s entry into the German market and the strengthening of its presence in the European Union.

Wockhardt chairman Mr. Habil Khorakiwala said, “esparma provided the right vehicle and was an attractive value proposition for our entry into Germany, the largest market of the European Union. esparma’s strong presence in urology, neurology and diabetology, is in line with Wockhardt’s therapeutic strengths. The acquisition will drive Wockhardt’s further growth in the European Union, besides boosting Wockhardt’s international brand equity. This will take our global strategy to a newer level of products and customers.”

esparma recorded sales of US$ 20 million (Rs. 90 crores) in the year 2003. The company has a sizeable portfolio of 135 marketing authorisations, of which 67 are in Germany. The company also has nine international patents and 94 trademarks.
Germany constitutes the largest generics market in the European Union. It is also among the most evolved generics markets in the world, with high penetration rates. The German generics market was worth US$ 6.1 billion in 2003, with a generics penetration rate of over 54%. The generics market in Germany accounts for over two-thirds of the Western European generics market.

“Europe is clearly emerging as the most attractive market, driven by patent expiries and regulatory changes. This is the right place and time for Wockhardt in view of our global consolidation plans,” Mr. Khorakiwala said.

Following the acquisition, Europe now becomes the highest contributor to Wockhardt’s total sales, at 40%, overtaking sales from India. Sales from Europe have crossed the US$ 100 million mark, now at US$ 110 million (Rs. 490 crores). The total international business now contributes 62% to Wockhardt’s turnover, a significant upward trend from a mere 9%, ten years ago.
The deal has been uniquely structured. Wockhardt has acquired esparma’s business and the sales and marketing organisation. Wockhardt has not acquired the production facilities of the company. It will currently have access to esparma’s production facilities and will subsequently move the manufacturing of the products to its own facilities in UK and India.

Wockhardt has incorporated a new company Wockhardt Germany, GmbH, to facilitate the new acquisition. The new company will have 70 employees, most of them in sales, marketing and regulatory functions.

esparma’s marketing team has established contacts with specialist doctors, besides drug stores and clinics. Brands like Dibenzyran (urology) and Jatrosom (neurology) each commands a 100% market share on prescription basis. Another urology product Blemaren has a 53% market share. The company was established in 1875, and is based in Osterweddingen, near Hannover.

This is Wockhardt’s third international acquisition, after the earlier UK acquisitions -- Wallis Laboratory (in 1998) and CP Pharmaceuticals (in 2003). Wockhardt is currently among the top 10 generic players in the UK, besides being the No. 1 Indian pharmaceutical company in the UK.

Developments in the past year -- the CP Pharmaceuticals acquisition, the setting up of a marketing subsidiary in the US, and the present acquisition of esparma -- will accelerate Wockhardt’s strategic focus on leveraging global opportunities for growth.
Wockhardt Limited is one of India’s leading research and technology-based pharmaceutical companies and a front-runner in biotechnology. Wockhardt has an active multi-disciplinary R&D programme employing over 350 scientists. It has three successful biotechnology products in the market - Biovac B (Hepatitis B vaccine), Wepox (recombinant erythropoietin) and Wosulin (recombinant insulin). 62% of Wockhardt’s sales comes from international business.