Pfizer keen to buy Wockhardts biotech businessThe world’s largest drug company, Pfizer, is going ahead with its plans to buy the biotech business of Wockhardt, but the Mumbai-based drugmaker has not shown any inclination for a sellout.

The $48-billion US firm has kicked off the second round of due diligence that could result in a buyout or strategic alliance, a banker privy to the development said.

Pfizer prefers a buyout and may well pay a hefty premium for Wockhardt’s Rs 100-crore biotech business, valuing it close to the Indian company’s total market value, the banker said, requesting anonymity.

Wockhardt, the country’s sixth-largest company by sales that is selling assets to tide over a financial crisis, has ruled out an outright sale of the biotech business. Its promoter and chairman, Habil Khorakiwala, had said earlier this year that the company would only rope in a global partner for a strategic alliance.

Under the proposed deal structure, Wockhardt has to get the US drug regulator’s approval for its plant in Aurangabad, which is claimed to have the capacity to meet 10-15 % of the global demand for major biopharmaceuticals , the banker added. Regulatory changes may allow biosimilars or generic versions of biotech drugs to be sold in developed markets in the next few years.

The spokesmen of both Pfizer India and Wockhardt declined to comment on what they termed as market speculation.

The company’s current market value, at Wednesday’s closing price
of Rs 167 on BSE, was Rs 1,830 crore (about $400 million). Global pharma companies find the valuations of Indian companies attractive. Recently , Sanofi Aventis bought rival French firm Merieux Alliance’s entire stake in Hyderabad-based Shantha Biotech, valuing the Indian company at $780 million.

A pharma analyst with a global bank said an outright sale is unlikely because the biotech business is the company’s most potentially lucrative business and it has invested around $200 million in it. Unless offered a very attractive valuation, it won’t divest the business. Other potential suitors for Wockhardt’s biotech business include French major Sanofi Aventis and Swiss company Novartis.

The American company has just completed the $68-billion acquisition of biotech major Wyeth, which is a new drug developer.