Wockhardt loses key employees to Abbott

Wockhardt loses key employees to Abbott
Comment E-mail Print Share
First Published: Sun, Aug 15 2010. 10 11 PM IST
Updated: Sun, Aug 15 2010. 10 11 PM IST
Mumbai: Drug maker Wockhardt Ltd has lost two-thirds of its 140-member sales and marketing team, including the business head of its nutrition unit, to Abbott Laboratories Inc., the US pharmaceutical firm that was buying its nutrition business some months ago.
Abbott poached around 90 sales and marketing executives, along with nutrition business head S. Nagaraj, from Wockhardt this month by offering them a sizeable pay hike, said an executive of the Mumbai-based firm, requesting anonymity because of confidentiality issues.
Nagaraj was senior vice-president (marketing) at Wockhardt and had set up its mother and childcare division five years ago—which evolved into the nutrition unit and became a key business segment for the company.
Wockhardt had signed a definitive agreement to sell this business for Rs620 crore to Abbott in October. But the deal was called off in April after Wockhardt’s lenders and bondholders threatened to block it until their dues were settled.
An email sent to Wockhardt on Thursday was not answered. Nagaraj was not available to comment despite repeated calls to his new office.
An executive at Abbott Nutrition India confirmed that Nagaraj had joined Abbott on 2 August. He also declined to be named.
“Abbott is expanding rapidly in India and we expect to continue hiring talented individuals with relevant experience to meet the needs of our growing operations,” said Steven B. Collens, director and head of public affairs at Abbott Nutrition International, in an email response.
Meanwhile, Wockhardt has started looking for replacements to manage the business. “Since the nutrition business is unique and there aren’t many experienced hands available, it may find it difficult (to replace Nagaraj),” said the Wockhardt executive quoted above.
The nutrition unit is a valuable part of the company’s non-core segments, and it hopes to cash in on it to repay debts, which amounted to Rs2,800 crore at the end of fiscal 2009. Part of the debt was repaid at the end of fiscal 2010, while the rest is being recast under a corporate debt restructuring plan.
V. Krishnakumar, executive director and head of healthcare at Avendus Pvt. Ltd, a global asset management and merchant banking firm, said Abbott plans to grow its nutrition business in India.
“At present, their portfolio is tiny here, and it may even renegotiate with Wockhardt for the strong brands that it has already established in the growing Indian nutrition market,” he said. “The MNC (multinational companies) must be preparing the ground for this (expansion) with experienced hands from Wockhardt itself.”
Wockhardt, which posted a loss of around Rs1,800 crore on foreign exchange derivatives and hedging business in 2008, saw its share price plunge to a low of Rs68.45 on 12 March 2009. On Friday, shares of Wockhardt closed at Rs161 apiece on the Bombay Stock Exchange.
The loss led to defaults in servicing debts to banks and the redemption of foreign currency bonds worth $110 million (around Rs510 crore) that are due to both foreign and domestic investors. Subsequently, Wockhardt had to sell its privately held hospital business, a pharma business in Germany and the veterinary business in 2009.
Comment E-mail Print Share
First Published: Sun, Aug 15 2010. 10 11 PM IST