Wockhardt Q2 net plunges 97% on US export ban

Wockhardt Ltd reported a 97 per cent drop in its net profit for the July-September 2014-15 quarter, hit by US ban on exports from the company's manufacturing plants in India, because of poor production processes.

The generic drugmaker reported consolidated net profit of Rs3.63 crore ($591,446) for the July-September 2014-15 quarter compared with a profit of Rs139 crore a year earlier.

Net sales fell 21 per cent to Rs948 crore as the ban imposed by the US Food and Drug Administration (FDA) last year on sales from Wockhardt's two major manufacturing plants in India hit overall sales.

Wockhardt chairman Habil Khorakiwala said although the company has taken steps to address US concerns on products from the two plants, sales from the facilities are unlikely to be approved until next year.

Wockhardt' said its US business declined by 56.3 per cent in Q2 of FY15 and by 58.6 per cent in the first half of FY15 and contributed 24 per cent of the global revenues for Wockhardt in Q2FY15 and 26.6 per cent in first half of FY15.        

The UK business declined by 3.8 per cent in Q2FY15 and declined by 2 per cent in H1FY15. The Irish market recorded a growth of 14.5 per cent in Q2-FY'15 and 13.8 per cent in H1FY15.

Wockhardt, however, saw its emerging markets business grow 4.8 per cent in Q2FY15 and by 7.1 per cent in first half of FY15 and its India business record a growth of 18.1 per cent in Q2FY15 and an 18 per cent growth in first half of FY15.

International business contributed 67.4 per cent of Wockhardt's total revenues for the July-September 2014-15 quarter.

Wockhardt launched 17 new products in the domestic market in Q2FY15 and 33 new products in H1FY15, including one new product launched in the Irish market.

In May, Wockhardt had said the FDA had also expressed concern over production processes at its Chicago-based Morton Grove Pharmaceuticals facility, which accounts for more than half of Wockhardt's sales in the United States.

Khorakiwala said Wockhardt has also taken steps to address the FDA's concerns about Morton Grove and is awaiting a response from the regulator.

The US ban on drug exports by Wockhardt and Ranbaxy Laboratories have affected India's drug exports, which grew just 2.6 per cent in the 2013-14 financial year ended 31 March 2014 against the 23 per cent growth rate recorded two years ago.