Wockhardt is in advanced talks to acquire majority control in Sidmak Laboratories Inc for around $100 m. Sidmak is among the top 10 generic companies with a basket of almost 100 products.
Wockhardt ranks fifth in terms of domestic sales with five brands among the top 250 in India. The company has among the top three R & D facilities in the country. It hived off the real estate property as well as its intravenous fluids business to its group company in the current year. Wockhardt had acquired Merind and Wallis last year.
The takeover will help Wockhardt consolidate its presence in the US generics market. A generic is another name for an off-patent drug. Once patents expire, any company can register a similar formulation with the controlling authority and enter the market to produce/sell such drugs. While competition increases prices come down by almost 75-80%.
Within the next five year’s drugs worth almost $ 32 bn are going off patent (more than 5 times the entire Indian market). This takeover will help companies such as Wockhardt which have globally competitive cost structures and skills in reverse engineering to compete well in the highly profitable US generic market since Sidmak already has a distribution network in place.
The joint venture had estimated a turnover of $ 539 million in 2001 and Wockhardt’s takeover could further up this figure.
With the pharma business post hive off to be listed in the next month, the news of this takeover would further perk up sentiment in the stock. Analysts have flagged Wockhardt as a buy.
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