|Lupin Managing Director Nilesh Gupta|
India's Wockhardt, like compatriot Ranbaxy Laboratories, has seen its finances bashed by plant bans put in place by the FDA after inspections found huge gaps in its quality controls. And like Ranbaxy, which is being bought out by Sun Pharmaceutical, Wockhardt has drawn M&A attention from another drugmaker looking to boost its business.
Nilesh Gupta, managing director of India's Lupin, told Bloomberg that his company gave Wockhardt a financial sizing up recently before deciding it didn't represent a good M&A target.
"We've certainly looked at it," Gupta told Bloomberg. "It doesn't hurt to always do that kind of analysis." He said with a troubled asset like Wockhardt you have to be willing to shut some facilities down, and Lupin is not in that mode right now.
"You really have to see, can I work with these plants, can I work with these people, or do I just shut all of this down?" he said. "And we're at least not of the mindset of shutting things down. We have been building, building, building--You get into that groove." Wockhardt, which like Ranbaxy has had two manufacturing plants banned from shipping to the U.S. in the last 15 months, told Bloomberg it has no intention of selling its business.
Gupta said Lupin is more interested in acquisitions in the $100 million to $400 million range. Earlier this year it acquired Netherlands-based Nanomi to improve its standing in the sterile injectables market. And Gupta said the company is quite interested in acquiring some of the mature drug portfolio that GlaxoSmithKline ($GSK) has for sale, but only the U.S. brands.
That approach falls in line with a new report from Moody's investment services that suggests Indian drugmakers could benefit from jumping into the global M&A market that has helped some of its larger competitors grow. The consultant says the U.S. market "represents a substantial growth opportunity for Indian drug companies" but only for those whose manufacturing practices can stand up to scrutiny by the FDA. One of the motivations for Sun Pharmaceutical to make its $4 billion offer for Ranbaxy is to get its bigger piece of the U.S. market.
The industry is trying to overcome the image issues that have come from the FDA banning plants and issuing a long list of warning letters to Indian drugmakers. The industry has hired a U.S. consulting firm, which has started a public relations campaign to patch up its battered rep. India is the second largest pharma exporter to the U.S., after Canada, and so has been hard hit by the plant bans. Exports by Indian drugmakers fell to 2.6% in the year ending March 31, about $15 billion, after reaching a growth rate of 23% from exports just two years ago.
- read the Bloomberg story
- here's a release on the Moody's report