Regulatory curbs pull down Wockhardt Q2 net 69% to Rs138.50 crore

Drug maker Wockhardt has reported a 69.46 per cent year-on-year decline in its net profit to Rs138.50 crore for the quarter ended 30 September 2013, due to a fall in sales of pharmaceutical products, on the back of regulatory curbs on exports from some of its plants.

Net sales of the company during the second quarter also slumped 11 per cent to Rs1,196.97 crore from Rs1,347.44 crore during the same period last year.

Despite curbs on one of its factories imposed by UK and US drug regulators, Wockhardt said international sales contributed 78 per cent of its total revenues.

The quarter saw a number of regulatory inspections at its quality and manufacturing facilities, Murtaza Khorakiwala, managing director of Wockhardt, said.

The decline in US business, Khorakiwala said, was mainly due to an import alert on Waluj products and certain one-off provisions towards customer credit notes.

Earlier, in July this year, UK regulators had imposed an import alert on Wockhardt's export-oriented plant at Waluj in Maharashtra and issued a precautionary recall of 16 medicines made by the company at the unit, after the US Food and Drug Administration (FDA) issued a similar import alert in May on the same facility.

Wockhardt had at that time said it had already initiated several corrective actions to resolve the issues at the Waluj plant. The company said it does not manufacture any product for the US market at the said facility.

UK drug regulator has since withdrawn the good manufacturing practices (GMP) certification for Wockhardt's facility in Kadaiya, Daman, the company's third facility to face regulatory heat, after Waluj and Chikalthana.

The UK MHRA has, however, allowed manufacturing of 10 critical drugs out of the 22 medicines for the UK/EU market.

The company's US business declined 19 per cent (26 per cent in dollar terms) though Europe business grew 2 per cent and France declined 18 per cent. India and emerging markets business slowed 7 per cent.

Khorakiwala said Wockhardt's continued focus on R&D has resulted in further filing of three Abbreviated New Drug Application (ANDAs) during the quarter, taking the total ANDAs pending for approval to 53.