Shares of Wockhardt are higher by more than 9 percent on September 29, marking its best day in nearly four months, as investors added bets after clarification emerged that US President Trump's fresh tariff on branded pharma imports will not apply to countries with which American has negotiated agreements - a relief for the European Union and Japan - a move that is expected to help the Indian drugmaker which has manufacturing facilities in Europe.
Wockhardt had acquired French firm Negma to strengthen manufacturing capacity in Europe for formulations and APIs, aside of manufacturing and injectable facility in North Wales, UK. The drug maker has presence in USA, UK, Ireland, Switzerland, Mexico, Russia and many other countries, with research facilities in India and UK, and a manufacturing facility in Ireland. Wockhardt has a significant present in Europe and India with nearly 78 percent of its global revenue coming from international businesses.
Exemptions for US Trade Partners?
While announcing the pharma tariffs, Trump did not specify if the levies would apply over and above the existing tariffs as defined with trade agreements with EU and Japan, and the UK. On September 26, Bloomberg News quoted a US government official who said duties on pharma imports from EU will not exceed 15 percent, as is the tariff framework of the deal. Drug imports from Japan too will be levied the rate defined by the trade pact, said the official.
EU Commission's deputy spokesperson Olof Gill had on Friday cited the trade agreement as an 'insurance' against Trump's fresh and higher tariffs on pharma imports into US. “This clear all-inclusive 15% tariff ceiling for EU exports represents an insurance policy that no higher tariffs will emerge for European economic operators. The EU is the only trade partner to achieve this outcome with the US,” Olof Gill had said.
Read More: Generic medicines exempted from Trump’s 100% pharma tariffs, but uncertainty continues
No Impact of Trump Tariffs on Zaynich
Wockhardt has said that Zaynich, the company’s investigational drug which has cured complex case of meningitis
under compassionate use, has achieved over 97 percent efficacy in clinic study for serious infections, and is being manufactured in Europe. Given the drug falls under the ambit of tariffs applicable under local trade agreement, Wockhardt has said that the Trump tariffs on pharmaceuticals 'will not have significant impact' on the molecule.
"Our new molecules, like Zaynich, which we would be going to rest as our first drug, the product is entirely manufactured in Europe, and therefore it will not be covered by Indian tariffs, and it would be covered by the European tariffs," Chairman Hablil Khorakiwala said during an interaction with CNBC-TV18 on the day Trump's pharma tariffs were announced.
"There are approaches available whereby one can reduce the impact of tariffs significantly." Khorakiwala also said that the application for a USFDA filing by the company for Zaynich is expected this week. "...generally the FDA takes about 9 to 12 months for approval. So, we expect by middle of next year to be launching in the US and subsequently, in H2 of next year to file in various in Europe and emerging markets," Murtuza Khorakiwla, MD of Wockhardt had said during the June quarter earnings call.
Wockhardt's Global Footprint
The drugmaker is amongst the top three Indian generic companies in UK, and sixth largest generic supplier in retail
and hospital channel in Ireland.
Wockhardt's new drugs, including Zaynich and Miqnaf - used to treat multi-drug resistant pathogens - is expected to contribute a 'fairly significant' to the company’s revenue from FY27 onwards, Khorakiwala has said in the past. Going forward, the drugmaker plans on pivot to become a novel drugmaker and is re-engineering to cater to newer therapies.
The pharma company's novel antibiotic portfolio including Zaynich, Miqnaf and Emrok, and, over the next 3-5 years, Wockhardt is developing even more insulin analogs like semaglutide.
Despite the surge in the share price this year, Wockhardt has been flat for this year, and up by 48 percent compared to last one year.
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