The Hindu Business Line : Wockhardt to hive off R&D unit

Drug maker Wockhardt has decided to demerge its research and development business into a separate entity. And the company expects to list the demerged entity by January 1, 2009, the company said on Friday, after its board gave an in-principle nod to the demerger proposal.

Wockhardt joins a host of drug makers, including Sun Pharma, Nicholas Piramal and Ranbaxy, that have already taken this road, and demerged their innovative research. These companies have listed or are in the process of listing their demerged research entities.

Wockhardt said that the new research entity will house the company’s new drug discovery programme and innovative new technologies being developed by its research team.

Focused entity

The Wockhardt Chairman, Mr Habil Khorakiwala, said in a company statement: “The R&D business has great potential and needs to be a focused entity for carrying out unrelenting research activities for the future. At Wockhardt we recognise this fundamental need and are restructuring our R&D business to unlock true value for all our stakeholders. This will enable the company to invite strategic investors interested in the R&D business.”

Drug makers have been flocking to demerge their research entities to de-risk their pharmaceutical businesses and possibly look to get a strategic investor on board to support the long-gestation drug research initiatives.

At the board meeting on Friday, Wockhardt’s board of directors also gave an in-principle nod to raise equity /equity-linked securities to the tune of $200 million to expand the domestic and international operations, the note said.

Wockhardt shares ended down 3.46 per cent on the BSE at Rs 396.25 on Friday.

More Stories on : Restructuring | Pharmaceuticals | Research & Development

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