Dubai: Wockhardt, an India-based pharmaceutical company, confirmed it plans to issue $250 million (Dh918.14 million) to $300 million worth of dollar-denominated bonds within the next six months.
Dr Habil Khorakiwala, founder and chairman of Wockhardt, said the company will use the capital it raises to refinance existing bonds worth around $200 million. The loss-making company has already obtained approval to issue a fresh round of bonds from its board of directors and shareholders,
“What we would be doing is we have an existing bond, so we’ll take a fresh bond and replace part of the existing bond,” he said.
We do supply some products to some of the countries here in the Middle East, but it is not very significant today. We want to build it up over the years as an important part of our future business.”
- Dr Habil Khorakiwala | Founder and chairman of Wockhardt
Asked when the issuance will take place, Khorakiwala said Wockhardt is waiting for market conditions to improve.
“It depends on when the market is right. The market is very choppy because of what is happening. We are not waiting for anything, but it’s a holiday season till early September. This issue between China and the US has also created a little turbulence in the bond market,” Khorakiwala said, adding that he did not expect the issuance to be put off beyond six months.
Wockhardt’s investment in Dubai factory
In an interview with Gulf News in Dubai, the chairman also discussed the company’s financial performance, describing it as a “breakeven situation” even as Wockhardt posted around Dh325 million in losses in the 2017 full-year ending in March 2018.
Khorakiwala said the losses came amid an increase in investment on research, with research spending now at 12-15 per cent of turnover.
He expects, however, the company, which is publicly listed in India, to return to profitability “within the next few quarters.”
The chairman was speaking earlier this week at an event to launch Wockhardt’s manufacturing facility in Dubai where the company plans to make antibiotics. Financing for the $40-million-facility came from internal resources and “some corporate borrowing,” Khorakiwala said.
The facility is specifically to manufacture medicine that acts against superbugs (bacteria that has developed resistance to antibiotics).
Manufacturing in Dubai
Wockhardt’s research spending in turnover terms
Wockhardt believes medication against superbugs is an “unmet medical need” and expects strong demand for its antibiotic once it is launched. But that won’t be for more than two more years as this drug is still under clinical trial. And until then, the facility in Dubai won’t be utilised.
“From all the information we have so far, we know it [the antibiotic] will work,” Khorakiwala said.
Asked if he was confident the drug will get regulatory approval after trial, the chairman simply said, “Yes.”
Besides the facility in Dubai, which is Wockhardt’s first in the Middle East, the company has created a business unit in the Emirate for marketing its products in the region. Currently, the pharmaceutical company supplies some products to certain countries in the Middle East, but the region is not a large buyer of Wockhardt’s products.
One area where the company sees strong potential is diabetes medication.
“We do supply some products to some of the countries here in the Middle East, but it is not very significant today. We want to build it up over the years as an important part of our future business,” Khorakiwala said.
“Diabetes in the Middle East, and actually all over the world, is growing very rapidly. In emerging markets, there’s double-digit growth in incidents and usage of diabetes products because you need more and more quantities with age.”
Another opportunity the company sees in the Middle East, and specifically in Dubai, is for a treatment centre that uses stem cells to treat diseases. Wockhardt already does stem cell research in India, and the chairman said it would consider using this treatment approach in Dubai but is not yet clear on how it develop that plan.