Wockhardt: the company helping to vaccinate Britain

 Wockhardt: the company helping to vaccinate Britain

Since the UK administered its first Covid-19 vaccine in early December, the rollout has been a rare success for a government beset by errors during the pandemic.

The race to vaccinate Britain has also offered a shot at redemption for Wockhardt, a once high-flying Indian pharmaceutical company that was investigated by US regulators over failings at its plants. The group now has a critical role in delivering the jab to millions.

A Wockhardt-owned plant in the Welsh town of Wrexham is responsible for putting the vaccine in vials and packaging it for dispatch to the UK regulator for inspection.

Habil Khorakiwala, Wockhardt’s chairman, hailed a “huge sense of purpose and pride”, after the UK government awarded the group the contract in August. On a visit to the plant in November, prime minister Boris Johnson declared that it could offer “salvation for humanity”.

Although Wockhardt has supplied medicines to the UK’s NHS for many years, the biggest vaccination programme in the country’s history brings a new degree of pressure for a company whose halcyon days were in the 2000s.

After going public in 1992, Wockhardt, like some domestic rivals, embarked on an international expansion as India became one of the world’s biggest suppliers of generic medicines for markets from the US to the EU. Its ambition led the Mumbai-based group to expand into the US, the UK, Ireland and France, but also unleashed twin crises.

Following inspections, the US Food and Drug Administration warned Wockhardt over failings at several of its plants between 2013 and 2017. The company had already been shaken by the 2008 financial crisis, which forced the company to restructure its debts.

International expansion

Bruised by the turmoil, Wockhardt shares have tumbled more than 70 per cent since peaking in 2013, giving the group a market capitalisation of just over Rs57bn. Mr Khorakiwala dropped off the Forbes list of billionaires in 2019.

Line chart of Share price (Rs) showing Wockhardt

In an interview with the Financial Times, Mr Khorakiwala admitted that the intervention by the FDA “definitely affected our business in the United States, significantly, but we have our business worldwide in the UK, Ireland and other countries”.

Wockhardt’s international horizon is a far cry from Worli Chemical Works, the chemicals company run by Mr Khorakiwala’s father, who was later the sheriff of Mumbai in 1992 when communal riots engulfed the city after the destruction of Babri Masjid by a Hindu mob.

Having studied science at Purdue University in Indiana, Mr Khorakiwala took over his father’s company and, according to his memoir, Odyssey of Courage: The Story of an Indian Multinational, renamed it Wockhardt to make it sound German.

Boris Johnson, UK prime minister, at Wockhardt’s plant in Wrexham, Wales, in November © Paul Ellis/Pool/Getty

The company’s international expansion took it into the UK in 1998, when it acquired Wallis Laboratories. Five years later, the group bought CP Pharmaceuticals in Wrexham.

Its presence is now paying off, with Wockhardt part of a consortium, including Oxford BioMedica and Cobra Biologics, tasked with helping the UK government meet its ambitious goal of vaccinating 2m people a week.

A major supplier to the UK

Under the contract, the Wrexham plant will fill vials with the vaccine and then package them for 18 months. The site, which on Wednesday called in emergency services to battle the threat of floodwater after heavy rain, has previously manufactured a range of treatments for diabetes, anticoagulation and pain management that are sold in vials, cartridges and ampoules.

Mr Khorakiwala said that the company was selected because of its long record in the UK and that its Wrexham plant had capacity available.

“We are a major supplier of injectables to the UK government for the last many years,” Mr Khorakiwala said, speaking from Alibaug, a town on the west coast of India. “We were one of the companies they evaluated, we had capacity, they reserved a certain facility with us.”

The 78-year-old entrepreneur added that Wockhardt, which supplies antibiotics and other products to the NHS, has “committed to supply whatever they need up to about 200m doses per year”. The plant is handling the Oxford/AstraZeneca vaccine.

More than 70% of Wockhardt’s sales come from overseas

Its role in the vaccination programme follows a testing few years in which the FDA unearthed failings at some of its plants in India; a facility in Morton Grove, Illinois; and at the site in Wrexham.

While those found at Wrexham in an inspection in 2015 were limited to issues such as disinfecting, the US regulator found more serious failings at its Indian and Illinois plants. According to warning letters from the FDA, they ranged from a failure to ensure “the accuracy and integrity” of data on its drugs to not thoroughly investigating any “unexplained discrepancy or failure of a batch” as it manufactured them.

“Everyone [Indian generics companies] knew they had to be first to market [in the US], it was a free for all,” said a person familiar with the FDA investigation in India.

Wockhardt was not the only Indian company targeted by US regulators over practices at their plants. In 2013, Ranbaxy Laboratories, once the country’s largest drugmaker, was fined $500m by the Department of Justice after pleading guilty to several charges.

Column chart of Net debt-to-equity ratio (%) showing Wockhardt's debt has been rising

A black eye

Katherine Eban, author of Bottle of Lies, an exposé on the generic drug industry, said “Wockhardt absolutely has a black eye” over the issues at its Indian plants.

Three of Wockhardt’s plants in India remain on the FDA’s import alert list, restricting their ability to sell in the US. Mr Khorakiwala said that of the three, he is only working to get one cleared for exports to the US.

“We are in the process of complying and in the next month or two we are going to offer our facility for reinspection,” he said, adding that he believes the company has “moved on” from that chapter.

In its latest annual report, Wockhardt said that “expenditures on remedial measures” continued to affect profitability, though it can still sell drugs in the US from plants not flagged by the FDA.

Mr Khorakiwala added that the issues at Wrexham had been fixed.

UK government officials said that the Wrexham site had been inspected and approved by the Medicines and Healthcare products Regulatory Agency, the country’s medicines regulator, in July. That inspection, as well as a follow-up in November, both received approval as meeting good manufacturing practice (GMP) standards, they said.

A spokesperson for the MHRA added that “since 2016, this site has undergone several inspections, the most recent of which was in November 2020, and has been found to meet GMP standards”.

Wockhardt’s facility in Wrexham © Christopher Furlong/Getty

The scrutiny from US regulators came just as Wockhardt was emerging from a crisis inflicted by its dollar-denominated debts. The plunge in the rupee forced the company to restructure after the financial crisis because servicing its US currency borrowings became too expensive.

“Wockhardt had these foreign currency loans, had big troubles and had to divest,” said Shrikant Akolkar, a pharma analyst at Ashika Stock Broking in Mumbai. “A few companies paid a heavy price for that.”

Antibiotics push

After the turbulence of the past decade, Wockhardt has been trying to reshape its business.

Last February, the group sold some of its branded generics business, which makes drugs that have come off patent, for Rs18.5bn to Dr Reddy’s Laboratories, one of India’s leading pharma groups. India’s regulator recently approved two new antibiotic medications developed by Wockhardt that target drug-resistant pathogens.

Mr Khorakiwala said that “now we are going in for new drugs like antibiotics for a global market and also we are going into biologicals and biosimilar products”, which are derived from living organisms rather than chemicals.

With Narendra Modi, India’s prime minister, this month launching a campaign to inoculate the country’s 1.4bn people, the Wockhardt chairman said he was also exploring vaccine distribution and marketing opportunities in the company’s home market.

Some analysts are sceptical that Covid-19 will bring long-term benefits to those companies involved in the vaccine industry.

“I’m not seeing the pandemic as a huge recurring opportunity for pharma in general,” said Nithya Balasubramanian, a pharma analyst at Sanford Bernstein.

But after the UK government’s show of confidence, Mr Khorakiwala, who is given to invoking everyone from Winston Churchill to Chinese philosopher Lao-tzu in his annual speeches to shareholders, refuses to write off the opportunity so quickly.

“The pandemic may go, but the need for vaccines may continue,” he said.

Additional reporting by Sarah Neville in London

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