Wockhardt Limited has taken over the business of the German pharmaceutical company esparma, GmbH. The deal, made at a consideration (equity value) of US$ 11 million (Rs. 49 crores), signals Wockhardt's entry into the German market and the strengthening of its presence in the European Union.
While announcing the acquisition, Wockhardt chairman Habil Khorakiwala said that esparma provided the right vehicle and was an attractive value proposition for the company's entry into Germany, the largest market of the European Union.
Esparma has now strong presence in urology, neurology and diabetology, which is in line with Wockhardt's therapeutic strengths. The acquisition is expected to drive the company's further growth in the European Union, besides boosting its international brand equity.
Last year, esparma recorded sales of US$ 20 million (Rs. 90 crores). This German company has now a sizeable portfolio of 135 marketing authorizations, of which 67 are in Germany. The company also has nine international patents and 94 trademarks.
Germany constitutes the largest generics market in the European Union. it is also among the most evolved generics markets in the world, with high penetration rates. The German generics market was worth US$6.1 billion in 2003, with a generics penetration rate of over 54%. The generics market in Germany accounts for over two-thirds of the Western European generics market.
Following the acquisition, Europe now becomes the highest contributor to Wockhardt's total sales, at 40%, overtaking sales from India. Sales from Europe have crossed the US$ 100 million mark, now at US$ 110 million (Rs. 490 croes). Acording to company sources the total international business now contributes 62% to Wockhardt's turnover.
With this deal, Wockhardt has acquired esparma's business and the sales and marketing organization only and it does not include the production facilities. It will currently have access to esparma's production facilities and will subsequently move the manufacturing of the products to its own facilities in UK and India.
Wockhardt has incorporated a new company Wockhardt Germany, GmbH, to facilitate the new acquisition. The new company will have 70 employees, most of them in sales, marketing and regulatory functions.
esparma's marketing team has established contacts with specialist doctors, besides drug stores and clinics. Brands like Dibenzyran (urology) and Jatrosom (neurology) each commands a 100 per cent market share on prescription basis. Another urology product Blemaren has a 53 per cent market share. The company was established in 1875, and is based in Osterweddingen, near Hannover.