Turnaround Story of Wockhardt Limited|Finance|Case Study|Case Studies

Turnaround Story of Wockhardt Limited

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Case Details:

Case Code : FINC086
Case Length : 23 pages
Period : 1959-2012
Pub. Date : 2013
Teaching Note : Not Available
Organization : Wockhardt Limited
Industry : Pharmaceutical
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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History of Wockhardt

In 2013, Wockhardt was a Rs. 46.14 billion Indian multinational pharmaceutical and biotechnology company. It was a research-based healthcare company with exposure in pharmaceuticals, biotechnology, and hospitals. By the end of FY12, Wockhardt had 12 manufacturing plants and 3 research centers worldwide with 7900 Wockhardt Associates in 21 different countries around the world. Till September 2012, company had filed 1,667 patents and had got a grant on 169 patents. However, Wockhardt was a very small concern in the early 1960s.

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In 1959, Murtaza's grandfather, Fakhruddin T. Khorakiwala (Fakhruddin), had acquired Worli Chemical Works (WCW) which manufactured medicines for common ailments. After returning from the US, Fakhruddin's son, Habil, took charge of WCW and renamed it ‘Wockhardt', which meant “work hard” in German. When Habil took over Wockhardt in 1966, it was a 0.4 million company with 20 employees.

This proved to be a turning point for the company. It began to grow significantly in terms of revenue, number of products, market share. etc. In the early decades, Wockhardt grew organically by setting up state-of-the-art greenfield manufacturing facilities in various parts of India, its home country, and sales and marketing offices in various parts of the globe. According to experts, Wockhardt's world class but low cost manufacturing facilities and its strong base in research had helped the company grow rapidly in the international market, especially in the European countries.

In 1991, the promoters of the company incorporated First Hospitals & Heart Institute Limited (FHHIL) to start a super specialty hospitals chain in India. In December 1992, the company went in for a public issue. In February 1994, Wockhardt issued US$75 million worth of Global Depository Receipts (GDRs), thereby becoming the first Indian pharmaceutical company to issue GDRs. In 1995, Wockhardt acquired RR Medi Pharma Limited based in Tamil Nadu in South India . This acquisition helped the company to reduce the cost of transporting bulky intravenous fluid to the southern parts of the country.

In 1998, Wockhardt acquired two companies, one in India and the other in the UK. In India, the company acquired a controlling stake in Merind Limited (Merind) from the Tata group for Rs. 470 million. Habil said, “By taking over Merind, Wockhardt became the fifth largest pharma company in the country.” In the UK, Wockhardt acquired Wallis Laboratories (Wallis) for US$5 million. According to experts, company used Wallis as a manufacturing facility for European markets. These two acquisitions increased the turnover of the company significantly. Habil said that the sales growth in the future would come largely from organic growth, partly aided by domestic and international acquisitions.

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