US pharma giant Abbott is to acquire the nutrition businesses of India's Wockhardt Limited, Carol Info Services Limited, and certain Wockhardt subsidiaries and group companies. The Abbott will be paying the Indian firm US$130 million in cash for the acquisition.
Wockhardt, based in Mumbai, has a significant presence in India's pediatric and adult nutrition segments with infant formulas, weaning foods and adult protein supplements. These products hold the number two position in India's pediatric nutrition category with Farex®, Dexolac® and Nusobee® infant formulas and Farex® weaning cereal. The adult protein supplement, Protinex®, is the segment leader. These transactions also include nutrition manufacturing facilities located in Lalru and Jagraon, India.
"This acquisition is an excellent strategic fit for Abbott to accelerate growth of its nutrition business in India, where the nutritional market is expected to experience strong growth in the coming years," said Holger Liepmann, executive vice president, Global Nutrition, Abbott. "Combining these trusted nutrition products, local manufacturing capability and commercial infrastructure with Abbott's existing pediatric and adult nutrition offerings positions Abbott very well to serve Indian consumers."
Abbott's international nutrition business is an important growth driver for the company and has had particularly strong growth in China, Southeast Asia and Latin America in recent years, a press release said.
The acquisition includes approximately 600 employees in total. Abbott has approximately 1,500 employees in India across all of its businesses and has been operating in India since 1910. Abbott offers Isomil®, PediaSure®, Ensure® and Glucerna® in India and plans to introduce additional products from its broad-based nutritional portfolio to Indian consumers in the coming years.
Wockhardt's over Rs 3,400 crore debt was restructured by its lenders in June. As per the corporate debt restructuring scheme (CDR), Wockhardt has to divest its non-core assets at an estimated value of Rs 790 crore, but the company has got a time frame of six years to complete the transactions.
"At Wockhardt, we invested and nurtured to build a valuable brand equity for these heritage brands and it was time now for a specialised nutrition-focussed company as Abbott to be able to leverage its full potential in the global markets," said Wockhardt Chairman Habil Khorakiwala.
This is yet another indication of the penetration of the Indian market by the big pharma and also of a distinct tendency in which companies reporting huge debts sell the still profitable parts of their businesses to remain in the market. Whether the strategy will succeed remains to be seen.