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Wockhardt Ltd that built its name as a maker of generic drugs is shifting its focus in the US market to developing new antibiotics, turning away from generics and entering a space largely vacated by Big Pharma in recent years. The company is working on new antibiotics and has identified segments for a push into biosimilar drugs, chairman Habil Khorakiwala said, in the wake of promising results shown by Zaynich, an antibiotic it developed in-house. Wockhardt is in the process of seeking approvals from the US Food and Drug Administration (FDA) for the drug, at a time of rising drug resistance and few new antibiotics.
The company is building a global business model for its drug discovery and research business, targeting a 10-year exclusivity in the regulated markets for its novel antibiotics, and new biosimilar drugs to treat diabetes and obesity, said Khorakiwala, 82, who founded the Mumbai-based drugmaker in 1967. “I want to derisk the organization fundamentally," Khorakiwala said in an interview. “You will see a (new) drug coming out of our portfolio every two years for the next five to seven years.
" Most large pharma companies have exited antibiotic research. Bristol-Myers Squibb, once a leader in antibiotics, exited infectious disease research in the 2000s. Eli Lilly followed in the early 2000s, while Sanofi left in the mid-2010s.
GlaxoSmithKline (GSK) and Pfizer have significantly reduced antibiotic research. Currently, the largest antibiotic is Pfizer’s Zavicefta, which has annual sales of about $700 million, according to Vishal Manchanda, senior vice-president of institutional research at Systematix Group. Though the figure is meagre for Big Pharma, for Wockhardt, the opportunity is big.
“What we have achieved is remarkable in drug discovery...
we chose an area like antibiotics, where Big Pharma was vacating. And there, we envisaged that in the next 15-20 years, there will be resistance developed," he said, recalling the company’s thinking back in the late 1990s, when it committed to this path. A potential blockbuster could revive the fortunes of Wockhardt, once among India's top generic makers but lost much of its market share over the years.
Khorakiwala touched upon Wockhardt's initial research, which suggested there were two areas the company could enter — pain and antibiotics. It figured pain medications would take the company into opioid analgesics, which are highly regulated due to their potential for abuse and addiction. Antibiotics presented an opportunity it could solve in a capital-efficient fashion, compared to the billions that Big Pharma invests in drug research.
“In 25 years, I have committed, as a company, $500 million plus (into antibiotics drug discovery)...
compared to our financial resources, it's a very significant, sustained, long-term commitment," Khorakiwala added. According to Khorakiwala, the US market has become "very uncertain", adding Wockhardt's focus will be on making so-called novel drugs for the US market, while its generics pharma business will focus on the emerging markets and Europe. Exiting the US generics market “will improve profits because we are losing money in the US," he said.
The US accounted for just 6% of its global revenues in FY24. The company has also shifted its manufacturing for its novel drugs for the US and developed markets to third-party players in Europe. This could insulate the company from US reciprocal tariffs, given that Europe doesn't impose tariffs on US goods, Khorakiwala believes.
However, US President Donald Trump has indicated plans to impose separate tariffs for all pharmaceutical imports, in which case it could affect the company as well. It will continue to manufacture locally for India and emerging markets. The company's winning horse could be Zaynich, a novel antibiotic.
The drug recently concluded global phase 3 trials in hospitalized complicated urinary tract infection patients, achieving a clinical cure rate of 96.8%, the highest efficacy ever. Wockhardt expects FDA approval for Zaynich by mid-next year, and its US launch in 2027.
The company's hope is the drug's large addressable market: The US has 250,000-300,000 patients who could use the drug. Treatments in the existing category are priced at $8,000-10,000 in the US. While Khorakiwala refrained from sharing exact figures of revenues he’s expecting from the drug, he said, “I need about 10,000-15,000 patients, to get $150 to $200 million.
" Manchanda of Systematix calls Zaynicha "great drug," while cautioning that its commercial opportunity is complex, since there have not been many successes in the antibiotic category. “Considering that this is a life-saving antibiotic, doctors would like to preserve this for the patients who need it and are not responding to all other treatment options," he said. He pointed out that Cefiderocol, marketed by Japanese firm Shionogi, which also works similarly, is positioned similar to Zaynich.
“It is about $250-300 million and still growing," he said. Zaynich is expected to be used as a last resort, when even drugs like Cefiderocol don’t work. “It should be a meaningful opportunity [for Wockhardt] and it's going to be large," Manchanda said.
Another Wockhardt antibiotic Miqnaf received approval from the Indian drug regulator early this year, and expects to reach the markets this month. It offers a once-a-day 3-day course for community acquired bacterial pneumonia, eliminating the need for hospitalization. This drug will likely be priced at a premium of 2x or 3x over first-line generics like azithromycin and augmentin.
For antibiotics used in serious patients as a second or third line of defence (such as Miqnaf), the market size is 150-300 crore, Manchanda said. Khorakiwala declined to share how much he expects the drug to make this fiscal. While Miqnaf is intended for India and emerging markets in the near-term, Zaynich and other antibiotics in the pipeline will first be launched in the US and Europe.
Once a pharma generics giant, Wockhardt ran into multiple financial challenges over the last two decades that eroded its market position. A spree of rapid acquisitions in the early 2000s swelled debt, which peaked at 4,000 crore in 2008. Losses from complex currency derivative hedging further weakened its financial position, forcing it into corporate debt restructuring to avoid potential bankruptcy.
In FY14, the US FDA imposed import alerts on two of its Indian plants, resulting in substantial revenue losses from the US market. As of FY24, its total debt stood at 2,112 crore. Its revenues, at 2,881 crore in FY24, have nearly halved from 5,610 crore in FY13.
The company posted a loss of 472 crore in FY24. Wockhardt shares which had seen significant volatility over the last two decades have taken off on the back of its R&D pipeline, gaining almost 10X in the last two years. Its share price has grown about 140% in the last year to 1,436 at market close on the NSE on Wednesday.
The company reported a net profit of 14 crore in the December quarter, against a net loss of 83 crore a year earlier. This was driven by a 3% increase in revenue from operations, which reached 721 crore, up from 701 crore year-over-year. Prior to this, the company had been posting consecutive quarterly losses.
With its two new antibiotics – Zaynich and Miqnaf – poised for launch, the company expects a turnaround in profitability. “They are yet to turn around..
.the turnaround could be triggered by [Zaynich] getting partnered with a large player in the anti-infective space," Manchanda said. “If they are able to partner with a large player, they would be able to realize the full potential of this opportunity.
That is one critical milestone that needs to define how their journey will be shaped up going forward," he said. Wockhardt wants to build its biosimilars business more robustly in the next five years, Khorakiwala said. Similar to the antibiotic space, the company has identified areas with limited competition.
It plans to introduce a product line of insulins and anti-obesity drugs, like GLP-1. “In the anti-diabetic space, the competitive scenario is less..
.therefore, if we come with a whole range over a long period of time, we can establish a business," Khorakiwala said. The focus for the biosimilars business will be India and emerging markets, where the company sees a similar unmet need, and significant headroom for growth.
The costs to manufacture and market these drugs in these regions would also be lower. The next 25 years for Wockhardt will be research-oriented, Khorakiwala said. The focus will be on new drugs in the anti-infectives space, building on their current pipeline.
“We have identified issues which will be a problem 10-15 years from today...
any drug develops resistance...
like Zaynich, after 20 years, it will develop resistance. So, you have to find a drug which is better," he said..
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