Competition hots up in Hep–B vaccine segment - Views on News from Equitymaster

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Competition hots up in Hep–B vaccine segment

Mar 14, 2000

Wockhardt has launched a Hepatitis B vaccine Biovac B. This is in collaboration with a German company Rhein Biotech GmbH. 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.

So far the Hepatitis B segment has been dominated by SmithKline Pharma’s Engerix–B. This product has grown at an average of over 50% per year over the last three year’s. Although companies like Bharat Serum and Shanta Biotech have successful products they have not been as successful in the marketing as SmithKline. With the entry of Wockhardt, the competition in the segment is bound to hot up.

First, since Wockhardt has in place a good marketing infrastructure in place. The company has 21 clearing and forwarding agents, 2500 stockists for distribution, 1200 medical representatives which would help it market its vaccine effectively.

Second, unlike SmithKline which imports the dosages from its parent’s Belgium plant, Wockhardt manufactures the vaccine in India which would not only enable it to price its vaccine a shade below those of Engerix–B but also enjoy higher margins. This is because last year the government imposed a 38.5% import duty on vaccines, which affected SmithKline’s margins since it did not raise its vaccine prices. The company is unlikely to raise prices this year too and hence the erosion in margins is expected to continue.

Market View:
Analysts have flagged Wockhardt as a buy since it has a strong product portfolio. The company derives around 30% from products introduced in the last five year’s and only 12% of its revenues accrue from products under price control.

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