The restructuring entails shutting down the company’s Morton Grove manufacturing facility in Chicago and using CMOs to manufacture a few high margin products to reduce annual costs
Wockhardt had said it has engaged multiple USFDA approved manufacturing partners to reduce cost (File Image)
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} function overlay(n) { document.getElementById(‘back’).style.width = document.body.clientWidth + “px”; document.getElementById(‘back’).style.height = document.body.clientHeight +”px”; document.getElementById(‘back’).style.display = ‘block’; jQuery.fn.center = function () { this.css(“position”,”absolute”); var topPos = ($ (window).height() – this.height() ) / 2; this.css(“top”, -topPos).show().animate({‘top’:topPos},300); this.css(“left”, ( $ (window).width() – this.width() ) / 2); return this; } setTimeout(function(){$ (‘#backInner’+n).center()},100); } function closeoverlay(n){ document.getElementById(‘back’).style.display = ‘none’; document.getElementById(‘backInner’+n).style.display = ‘none’; } stk_str=”; stk.forEach(function (stkData,index){ if(index==0){ stk_str+=stkData.stockId.trim(); }else{ stk_str+=’,’+stkData.stockId.trim(); } }); $ .get(‘//www.moneycontrol.com/techmvc/mc_apis/stock_details/?classic=true&sc_id=’+stk_str, function(data) { stk.forEach(function (stkData,index){ $ (‘#stock-name-‘+stkData.stockId.trim()+’-‘+article_id).text(data[stkData.stockId.trim()][‘nse’][‘shortname’]); }); }); function redirectToTradeOpenDematAccountOnline(){ if (stock_isinid && stock_tradeType) { window.open(`https://www.moneycontrol.com/open-demat-account-online?classic=true&script_id=$ {stock_isinid}&ex=$ {stock_tradeType}&site=web&asset_class=stock&utm_source=moneycontrol&utm_medium=articlepage&utm_campaign=tradenow&utm_content=webbutton`, ‘_blank’); } } Pharmaceuticals major Wockhardt has during its investor meeting on February 21 stated that it plans to restructure the United States business to shave off $ 12 million of annual expenses, according to its filing with the exchanges.The restructuring entails shutting down the company’s manufacturing facility at Morton Grove (MGP Chicago – Illinois, US), and handing off the manufacturing of a few high-margin products to third parties.Investors have cheered this development. At 11 am, the stock was quoting at Rs 199.55 apiece on the NSE, higher by 3.5 percent amid heavy volumes. This has been the best intraday gain for the stock in four months. However, in the past one year, the stock has tumbled over 40 percent.Restructuring businessFor cost improvements in the country, Wockhardt plans to site transfer from the in-house Chicago site to contract manufacturing organisations or CMOs. As per the plan told to investors, the in-house manufacturing from MGP Chicago, which now has a fixed cost of $ 25 million, will be divided between CMOs in the US, Canada and Gulf Cooperation Council (GCC) regions at a variable cost of $ 6 million.It added that the US business would continue to maintain sales with approximately 40 percent gross margins, thus allowing for savings of around $ 12 million each year.Contract manufacturingIn an earlier statement to the exchanges, Wockhardt had said it has engaged multiple US Food and Drug Administration (USFDA) approved manufacturing partners for the same. These facilities will manufacture various products for sale in the US and North America under the Wockhardt brand.“This new arrangement is in the best interest of the company as this will help it to avoid the manufacturing and quality management cost completely and allow the management to focus on penetrating and expanding the market share of its products in the US and North America,” the statement read.Debt pared downIn the statement shared with investors, Wockhardt said it is deleveraging and reducing its long-term external debt over consecutive financial years.In FY21, the company’s total global debt was Rs 1,287 crore, which went down to Rs 812 crore in FY22 and stood at Rs 608 in December 2022. For its India business too, debt was reduced to Rs 355 crore in December 2022, compared to Rs 544 in FY21.The long-term debt-to-equity ratio over Q1FY23, Q2FY23 and Q3FY23 has reduced from 0.18 to 0.17 and then 0.16, respectively.Q3 records Rs 102 crore net lossThe company on February 13 released its Q3 results and reported a consolidated loss after tax of Rs 102 crore in the December quarter, impacted by lower sales and higher expenses. It posted a consolidated profit after tax of Rs 2 crore in the same quarter of the previous financial year.Consolidated revenue from operations was Rs 699 crore in the quarter under review compared to Rs 854 crore in the year-ago period, it added. The drug manufacturer’s total expenses stood at Rs 803 crore as against Rs 884 crore in the corresponding period a year ago, the company said.During the quarter, its India business posted a revenue of Rs 175 crore.
