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Wockhardt: R&D picks momentum - Views on News from Equitymaster
 
 
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  • Apr 2, 2002

    Wockhardt: R&D picks momentum

    Yesterday Wockhardt announced that the first molecule (WCK-771) from its research pipeline has entered in to Phase-I of clinical trials in India. WCK-771 is an anti-infective molecule used in the treatment of sepsis. The company has already started exploring opportunities for out licensing the molecule.

    Wockhardt has earlier highlighted the molecule’s superior safety and efficacy over currently available drugs such as Vancomycin (Aventis Pharma) and Linezolid (Pharmacia). According to the company, globally there are only a few competing drugs, which are under clinical development for the above product. The prevailing market size for such a drug is in excess of US$ 1 bn. Considering that the molecule has just finished pre-clinical trials it would take another 6-9 months time to complete Phase I clinical trials.

    The biotech research of Wockhardt has already yielded results with two biotech products already in place. A major forthcoming highlight from this division is the commencement of human recombinant insulin manufacturing capacity. Currently, there are only three other companies in the world to have the required expertise in this field. The domestic requirement of human insulin is currently met through imports.

    Wockhardt is planning to launch this product by end 2003 with an aggressive pricing of 30-40% discount to the imported alternatives. We expect the company to launch the same in developed markets within 18-24 months of domestic launch, keeping in mind regulatory approvals. Considering strong competitive advantage, we expect the company to capture a considerable share of the domestic Rs 3 bn insulin market (global demand US$ 3.5 bn).

    As far as other research projects are concerned, the company is also working on 9 other NDDS projects. Acceptance of WCK-771 for clinical trials marks a good beginning for the company in the area of NCE (New chemical entity) research. However, it would be still premature to expect milestone payments at this point of time. It should be understood that chances of Phase I molecule finally succeeding are low and any earnings visibility is far fetched at this point of time. At the current market price of Rs 408, the stock trades at 14.5x FY02 expected earnings.

     

     

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