Friday, May 14, 2021

Wockhardt: the company helping to vaccinate Britain

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Since the UK administered its first Covid-19 vaccine in early December, the rollout has been a rare success for a government plagued by mistakes during the pandemic.

The race to vaccinate Britain also offered a chance of redemption for Wockhardt, a once high-profile Indian pharmaceutical company that US regulators have been investigating. plant failures. The group now has a pivotal role in delivering the jab to millions of people.

A factory owned by Wockhardt in the Welsh town of Wrexham is tasked with putting the vaccine into vials and packaging it for shipment to the UK regulator for inspection.

Habil Khorakiwala, chairman of Wockhardt, praised “an immense sense of purpose and pride” after the British government awarded the group the contract in August. During a visit to the factory in November, Prime Minister Boris Johnson said it could offer “salvation to mankind”.

Although Wockhardt has provided drugs to the UK’s NHS for many years, the largest vaccination program in the country’s history brings a new level of pressure for a company whose heyday was in the 2000s.

After its IPO in 1992, Wockhardt, like some domestic competitors, embarked on international expansion, with India becoming one of the world’s largest suppliers of generic drugs for the US to EU markets. . His ambition led the Bombay-based group to expand into the United States, the United Kingdom, Ireland and France, but also triggered a double crisis.

Following inspections, the US Food and Drug Administration warned Wockhardt about the failures of several of its factories between 2013 and 2017. The company had already been shaken by the financial crisis of 2008, which forced it to restructure their debts.

International expansion

Struck by the turmoil, Wockhardt shares have fallen more than 70% since their peak in 2013, giving the group a market cap of just over Rs 57 billion. Mr Khorakiwala retired from the list of Forbes billionaires in 2019.

In an interview with the Financial Times, Mr. Khorakiwala admitted that the FDA intervention “has definitely affected our business in the US, significantly, but we have our business worldwide in the UK, in Ireland and other countries ”.

Wockhardt’s international horizon is far removed from Worli Chemical Works, the chemicals company run by the father of Mr. Khorakiwala, who was later Sheriff of Mumbai in 1992 when community riots engulfed the city after Babri’s destruction. Masjid by a Hindu crowd.

Having studied science at Purdue University in Indiana, Mr. Khorakiwala took over his father’s business and, according to his memoir, Odyssey of Courage: the story of an Indian multinational, renamed it Wockhardt to make it German.

Boris Johnson, British Prime Minister, at the Wockhardt factory in Wrexham, Wales, in November © Paul Ellis / Pool / Getty

The company’s international expansion brought it to the UK in 1998, when it acquired Wallis Laboratories. Five years later, the group bought CP Pharmaceuticals from Wrexham.

His presence is now bearing fruit, with Wockhardt part of a consortium, including Oxford BioMedica and Cobra Biologics, tasked with helping the UK government meet its ambitious goal of vaccinating 2 million people per week.

A major supplier from the UK

As part of the contract, the Wrexham plant will fill vials with the vaccine and then pack them for 18 months. The site, which called emergency services on Wednesday to tackle the threat of floodwater after heavy rains, has already manufactured a range of treatments for diabetes, anticoagulation and pain management that are sold in vials, cartridges and ampoules.

Mr Khorakiwala said the company was selected because of its long history in the UK and its Wrexham plant had spare capacity.

“We have been a major supplier of injectables to the UK government for many years,” said Khorakiwala, speaking of Alibaug, a town on the west coast of India. “We were one of the companies that they evaluated, we had capacity, they booked a certain facility with us.”

The 78-year-old entrepreneur added that Wockhardt, which supplies antibiotics and other products to the NHS, has “pledged to provide everything they need up to around 200 million doses per year.” The factory handles the Oxford / AstraZeneca vaccine.

Over 70% of Wockhardt's sales come from abroad

Its role in the vaccination program follows tests of a few years in which the FDA discovered failures in some of its factories in India; a facility in Morton Grove, Illinois; and on the Wrexham site.

While those found in Wrexham during a 2015 inspection were limited to issues such as disinfection, the US regulator has found more serious failures at its factories in India and Illinois. FDA warning letters ranged from failure to ensure the “accuracy and integrity” of its drug data to failure to fully investigate any “unexplained anomalies or batch failure.” during its manufacture.

“Everyone [Indian generics companies] knew they had to be the first to market [in the US]it was free for everyone, ”said a person familiar with the FDA investigation in India.

Wockhardt was not the only Indian company targeted by American regulators on the practices of their factories. In 2013, Ranbaxy Laboratories, once the country’s largest drug maker, was fined $ 500 million by the Justice Department after pleading guilty to multiple counts.

Net debt ratio (%) column chart showing Wockhardt's debt has increased

A black eye

Katherine Eban, author of Bottle of Lies, a presentation on the generic drug industry, said that “Wockhardt absolutely has a black eye” on the problems in its factories in India.

Three of Wockhardt’s factories in India remain on the FDA’s import alert list, limiting their ability to sell in the United States. Mr. Khorakiwala said of the three he was only working to get one cleared for exports to the United States.

“We are in the process of complying and in a month or two we will be offering our facility for re-inspection,” he said, adding that he believed the company had “passed” this chapter.

In his latest annual report, Wockhardt said that “remedial action expenses” continued to affect profitability, although he could still sell drugs in the United States from factories not reported by the FDA.

Mr Khorakiwala added that the problems in Wrexham had been resolved.

UK government officials said the Wrexham site was inspected and approved by the Medicines and Health Products Regulatory Agency, the country’s medicines regulatory body, in July. That inspection, as well as a follow-up in November, were both approved as meeting good manufacturing practice (GMP) standards, they said.

A spokesperson for the MHRA added that “since 2016, this site has undergone several inspections, the most recent of which was in November 2020, and was found to comply with GMP standards”.

Wockhardt installation in Wrexham © Christopher Furlong / Getty

The scrutiny by US regulators came as Wockhardt was emerging from a crisis inflicted by his dollar-denominated debt. The fall of the rupee forced the company to restructure after the financial crisis because the service of its loans in US currency became too expensive.

“Wockhardt had these foreign currency loans, got in big trouble and had to pull out,” said Shrikant Akolkar, pharmaceutical analyst at Ashika Stock Broking in Mumbai. “A few companies have paid a heavy price for it.”

Antibiotics grow

After the turbulence of the past decade, Wockhardt tried to reshape his business.

Last February, the group sold part of its branded generics business, which manufactures patent-free drugs, for Rs 18.5 billion to Dr Reddy’s Laboratories, one of India’s leading pharmaceutical groups. The Indian regulator recently approved two new antibiotic drugs developed by Wockhardt that target drug-resistant pathogens.

Mr Khorakiwala said that “now we are moving towards new drugs like antibiotics for a global market and we are also moving towards biologics and biosimilars”, which are derived from living organisms rather than chemicals.

With Narendra Modi, Prime Minister of India, this month launch a campaign to immunize the country’s 1.4 billion people, the chairman of Wockhardt said he is also exploring opportunities for the distribution and marketing of vaccines in the company’s domestic market.

Some analysts doubt that Covid-19 will bring long-term benefits to companies involved in the vaccine industry.

“I don’t see the pandemic as a huge recurring opportunity for the pharmaceutical industry in general,” said Nithya Balasubramanian, pharmaceutical analyst at Sanford Bernstein.

But after the British government’s show of confidence, Mr Khorakiwala, who has a habit of invoking everyone from Winston Churchill to Chinese philosopher Lao-tzu in his annual speeches to shareholders, refuses to cancel the opportunity so quickly .

“The pandemic may go away, but the need for vaccines may continue,” he said.

Additional reporting by Sarah Neville in London

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