The Wockhardt Board approved an amendment to the Rs 1,850-crore agreement with Dr. Reddy’s Laboratories Ltd. for the distribution of some branded generics businesses within Mumbai-based drugmaker and a manufacturing facility to evaluate the effect of the Covid 19 pandemic on their assessments.
“In the aftermath of the pandemic and the consequent government restrictions, there has been a reduction of revenue from the sales of the products forming part of the business undertaking during March and April 2020,” Wockhardt said in an exchange filing.
The agreed consideration of Rs 1,850 crore will now be paid as: Rs 1,483 crore on the closing date under the business transfer agreement, Rs 67 crore: deposited by the purchaser in an escrow account will be released subject to adjustment, Rs 300 crore: will be held by Dr. Reddy’s on the closing date for assessment of the Covid-19 impact.
The amount of Rs 300 crore holdback is released if revenues from sales of such goods exceed Rs 480 crore during the 12 months after closure. Dr. Reddy’s will pay Wockhardt twice as much, subject to the maximum holdback amount, as the revenue exceeds Rs 480.
In February, the Board considered and agreed with Dr. Reddy’s downturn sales to transfer companies in India and a variety of other foreign territories including Nepal, Sri Lanka, Bhutan, and the Maldives. The company includes 62 brands in a number of fields including respiratory, neurology, VMS, dermatological, gastroenterological, pain, vaccine, and related sales.
The proposed sale of Wockhardt’s portfolio was to raise capital for new investment and pare debt. It is also aligned to the strategic plan of the company for shifting its therapeutic niche portfolio from acute areas to more chronic businesses, such as anti-diabetes, the central nervous system, and new chemical entities.