Wockhardt Not To Face Significant Impact Of US Tariffs, Says Chairman Khorakiwala

Pharmaceutical company Wockhardt won't face a significant impact of the global turmoil over US tariffs due to its strong business model, according to the company's founder and chairman Habil Khorakiwala.

In an interview with NDTV Profit, Khorakiwala expressed confidence in the company's business model that focuses on drugs and biologicals. The company's exposure to the US market is just 5%, and it is planning to exit the generic business in the country soon.

“We hardly have any significant US business. Our exposure to the US is less than 5%, and we plan to exit the US generic business. So, we will not be impacted by US tariffs. Our fundamental business model of focusing on new drugs and biologicals in the emerging market is sound, and it is not going to be affected by the US-led tariff war, which is happening worldwide,” Khorakiwala told NDTV Profit.

The US business of the company was facing significant losses recently, he added.

As far as the impact of the tariffs on the overall pharmaceutical sector is concerned, it will force India-based manufacturers with significant exposure to the US to revisit their strategy.

“Many other pharma companies have a very large exposure to US business, somewhere between 30% and 50% of their revenue. They will have to adjust themselves by maybe a little squeeze in margin, with little impact also on the sales. It will be extremely difficult for the pharma industry to manufacture all the products in the US because it will take several years to do that,” he said.

“Pharma is investing in research, and even for generics, it takes roughly two, three years before one sees the benefit of this research. So, in the pipeline, whatever is there, it will continue for a while. But, certainly, companies would revisit their fundamental strategy to diversify much more and maybe look at Europe and other Western markets,” he said.

The tariffs will also increase the cost burden for US consumers, as 40% of the generic prescriptions in the country are met by Indian products, he said. “So it's going to be a fairly complicated affair, but the result would be that the US consumer and the healthcare providers will have to accept a significant part of the burden. The US government takes care of about 50% of the coverage, so it will cost them too,” he said.

He differentiated the current situation from tariff threats during Trump's first term, calling this shift "very fundamental”. Moving production to the US, he argued, would deny Indian companies the cost advantage of manufacturing in India. “Once you shift your production to the US, your competitiveness as an Indian company no longer is valid because your cost structure would be identical to anybody else manufacturing in the US or Europe,” he said.

Shares of Wockhardt closed in the 10% lower circuit limit at Rs 1,213.05 apiece on the NSE amid the sharp fall in the benchmark Nifty. The key index ended the day's trade at 22,161.60, down 3.24%.