Wockhardt Ltd closes Illinois manufacturing facility

In view of the changed pharmaceutical market situation in the United States, the management had initiated various cost optimisation measures, including restructuring its USA business model, by closing down its manufacturing facility in Illinois, USA and undertaking its business in USA through Contract manufacturing the products sold by it in US/North America by engaging USFDA approved manufacturing partners meeting the superior quality standards acceptable to the Company.

In line with the above, the Company has now engaged multiple USFDA approved manufacturing partners, after thorough due diligence and inspection of their facilities, to manufacture various products of the Company for sale in US/ North America under the same brand and Wockhardt name. Further, the Company is relieving all its staff who were directly engaged by our US subsidiary in its plant in connection with the manufacturing process in a phased manner and in full compliance with the applicable local laws.

The Company believes, that this new arrangement is in the best interest of the Company as this will help the Company to avoid the manufacturing and quality management cost completely resulting in significant savings in operating and overhead cost while allowing the management to completely focus on penetrating and expansion of the market share of its products in US/ North America.

In view of the above and since the concerned site was under 483 observations and warning letters from US FDA, the Company has entered into a Consent Decree with DoJ which resolves and settles all matters with the US FDA, whereby the Company shall stop all manufacturing activities at the plant for the present. There is no financial compensation in the Consent Decree.

The management emphasizes that the above closure of the manufacturing unit will not affect the availability of its products in the US market in view of the alternate arrangement already put in place and on the contrary allow the Company to grow more vigorously in the US market.

Shares of Wockhardt Limited was last trading in BSE at Rs. 234.05 as compared to the previous close of Rs. 233.65. The total number of shares traded during the day was 44579 in over 1400 trades.

The stock hit an intraday high of Rs. 237.50 and intraday low of 232.00. The net turnover during the day was Rs. 10447943.00.

Source : Equity Bulls

Keywords

Wockhardt INE049B01025 USA Business Illinois USA ManufacturingFacility Closed Restructuring