Wockhardt said Paris-based Negma was the fourth largest integrated pharmaceutical group in France, with sales of $150 million. That put the acquisition price at 1.8 times sales or a rather steeper multiple of 9.7 times Negma's earnings before interest, tax, depreciation and amortisation (EBITDA). The deal makes Workhardt the largest Indian pharmaceutical company in Europe, with 1,500 employees based in the continent. It is the company's fifth European acquisition, following Wallis and CP Pharmaceuticals in the UK, Esparma in Germany and Pinewood Laboratories in Ireland. Negma is also the third company Wockhardt has acquired in less than 12 months, the previous two being Pinewood and Dumex India.
Negma will take the European portion of Wockhardt's business up to more than 60 per cent of overall revenues, compared with close to 50 per cent before the acquisition. The Indian company has a portfolio of 130 products in the European market and plans to launch 24 more within the next year. It now claims a pan-European presence, with operations in the key markets of Germany, the UK, Ireland and France. In the first quarter ended 31 March 2007, Wockhardt's European sales rose by 93% year on year, compared with 35 per cent growth in the company's Indian business.
A research-based pharmaceutical company with 172 patents, Negma holds leading positions in the osteoarthritis, rheumatology, phlebotonic and arterial hypertension segments, Wockhardt said. Negma's listed products on the French market include Veinamitol, a vasculoprotector, vein tonic and haemorrhoid treatment containing troxerutine; Urispas (flovoxate chlorhydrate) for the treatment of vesical instability; the antihypertensive and beta-blocker Nebilox (nebivolol chlorhydrate); and the arthritis treatment Art 50 gel (diacereine).
Negma also has "an exciting range of products in various stages of development", noted Wockhardt, which highlighted the French company's "strong research and life-cycle management capability". According to the Indian company's chairman Habil Khorakiwala, these include combination products and new chemical entities, with the most advanced product potentially scheduled for launch in less than two years' time. The acquisition will enable Wokhardt to extend Negma's patented portfolio - currently available only in France - to other markets where the Indian company already has a strong presence, such as the UK, Germany and Ireland, pointed out Khorakiwala.
It also provides Wockhardt with "the right entry vehicle" for the French generics market, leveraging the company's "robust EU portfolio and impressive pipeline", he added. In addition, Negma will expand Wockhardt's manufacturing capability in Europe, giving it a total of four facilities for active pharmaceutical ingredients (APIs), injectables, tablets, capsules and creams. Negma has two manufacturing facilities, one with both API and formulation capabilities, the other geared to formulations (capsules, powders, gels, vials and liquids) only. Wockhardt also has facilities in Ireland and the UK.
"With this acquisition, we have stepped up our sales and are on the fast track to achieving our corporate strategy of $1 billion turnover by 2009," Khorakiwala commented. He added that acquisitions would "continue to be a key element of growth strategy at Wockhardt, over and above the organic growth route". The last few years have seen a flurry of acquisitions by Indian generics companies in Europe, the most notable being Dr Reddy's Laboratories' €480m takeover of Betapharm, the fourth largest generics company in Germany, in February 2006.
Ranbaxy has been particularly active on this front. In just one month (March 2006) it snapped up GlaxoSmithKline's unbranded generics business, Allen SpA, in Italy; a 96.7 per cent stake in the Terapia, the largest independent generics company in Romania; and Ethimed NV, a Belgian distributor of generic drugs.
Wockhardt not only manufactures and markets generics but has a substantial research and development programme for generics, new chemical entities and biopharmaceuticals. The company's biotech portfolio includes insulin, erythropoietin, hepatitis B vaccine, interferon alpha 2B, Glargine (long-acting insulin) and granulocyte-colony stimulating factor (G-CSF).