Foreseeing that the Indian
pharmaceuticals industry will undergo a consolidation phase over the next seven-eight
years, Wockhardt has worked out a strategy to help it survive in a scenario of intense
competition, in which MNCs will play a major role.The three-pronged strategy includes
expanding domestic business in formulations, developing bulk drug active substances for
the international market, and sourcing formulations in the US and Europe in two-three
Wockhardt has an expansion plan of Rs.200-300 crore for the
next three years which will include newer areas of bio-technology, antibiotics,
fermentation technology and active substances for the world market. The business is
divided into formulations, bulk infusions, food and dietetics, and biological products.
Wockhardt enjoys a diverse product profile and its focus on
the export of Captopril, whose generics market in the US is huge, and which went
off-patent in February 1996, will help reap high returns. The bulk drug for Captopril
fetches higher margins in the US market. It thus has access to the US generic market. A
similar marketing strategy through a 100 per cent subsidiary was adopted in Europe.
Other markets that Wockhardt is tapping for formulations
through manufacturing joint ventures are South Africa, China, Russia and the Gulf. The
export market now accounts for 20 per cent of Wockhardt''s sales, 80 per cent being bulk
drugs -- and the percentage of exports could grow to 40 per cent over the next five years.
Although its margins are slightly under
pressure in the IV fluids segment which
contributes about 26 per cent of turnover, this division has gained a critical mass, has
fairly good manufacturing facilities and capacity utilisation, and is cost-efficient, and
therefore has better price realisation. The company, which has been pushing exports, now
plans to strengthen its position in the domestic market.
Wockhardt will be one of the few Indian companies to do well once IPR comes into effect.