Dubai, May 26, 2020: Supplies of generic medicines manufactured at the Dr. B.R. Shetty owned NeoPharma in UAE have dropped significantly in recent weeks, local pharmacy sources confirm. This disruption is starting to cause problems for regular buyers of these medicines, which have until now been less expensive options to branded drugs.
For instance, Thinrin, one of NeoPharma’s popular products prescribed for heart patients (as an option for “Plavix” from Bristol-Myers Squibb Co. and Sanofi) has virtually disappeared from pharmacy and hospital shelves, multiple sources confirm.
“NeoPharma seems to have been caught up with whatever problems Dr. Shetty has been having on his finances and investments in the last four months,” said one pharma supplier in Dubai. “And because it’s medicines that we are talking about, problems at NeoPharma is causing a wider set of issues, especially for cost-conscious buyers.”
‘Gulf News’ tried to connect with Dr. Shetty, who has been in India for some months now, and NeoPharma officials for a status on the production at the UAE plant, but could get no response.
“Neopharma production has slowed down considerably in recent weeks – from what we heard, only a minimum number of production lines are operational,” said a source. “If that were not the case, the company should not have been having a problem on the distribution side.
"There seems to be a shortage of funds for raw materials and salaries. The offshore plants are operating as they are more or less independent. Yet, no one knows about their leverage (debts).”
The pharma business, in which Dr. Shetty reportedly holds 100 per cent, has units in the US, India and Japan.
Many in the financial services industry had expected Dr. Shetty to sell NeoPharma – or a significant stake in it – to raise funds and pay off “debts” that he had accumulated on his other ventures, NMC Health and UAE Exchange Centre. Any bidder will need to tread carefully, given how loans suddenly show up on the company’s books.
But right now, chances of any such stake sale seem remote, given the kind of issues Dr. Shetty has been confronted with. (Interestingly, a top official at NMC Health’s finance department had held a similar role in NeoPharma. This person is no longer in the country. Another common factor is that E&Y was the auditor for all three entities, including Finablr. E&Y is facing a probe in the UK over its handling of affairs at NMC Health.)
No confirmation on the return
Recently, Dr. Shetty had issued a statement to the media that he would be making a return to the UAE to get his name cleared and also take up the matter of the missing billions of dollars from the companies which he founded and had, until recently held significant shareholding.
But any chance of an immediate return looks less likely now. An Indian court had this month issued orders freezing Dr. Shetty’s assets for his $250 million exposure to Bank of Baroda. Given this court directive, it’s “highly unlikely” he will be flying out of India any time soon, sources close to him said.
“Shetty will be caught up with clearing his legal/financial problems in India… that should be his number one priority,” said a legal source. “Better to put off the fires where he is now than try to solve problems elsewhere. More so as his properties are getting attached one by one.”
A rock and a hard place
In the statement to media, Dr. Shetty had repeatedly brought up the investigations he had commissioned into NMC’s financials, and also said that a small group of employees had caused all the problems he is facing now, including the bank debts piled up under his name.
“Shetty’s investigation did come up with findings that suggest his signature on some documents were forged,” said a source who still maintains close contacts with the family. “But for Shetty to convince UAE authorities that this is the case, he needs to be in the UAE.
“Just issuing media statements that he will do everything to clear his name will not carry much weight if the return to the UAE gets delayed once international flights resume. He has always made loud media statements like a $5 billion contribution to the "Make in India" campaign or $1 billion to the Kashmir’s "film city"."
Dr. Shetty and sources close to him had been in contact with lender banks in the UAE to find a way out of the impasse. But there has been no word yet on whether these informal negotiations delivered any results.
A possible breakthrough
Meanwhile, the UK High Court appointed administrators at NMC Health seem to be making quite a bit of progress on disposing off non-core assets held by the Group.
Multiple sources in the banking sector, with exposures to NMC Health, confirm that an early sale of NMC Trading is “likely”. The administrators have received multiple bids, these sources add.
“NMC Trading had been a steady generator of revenue through the years, led by its medicines, cosmetics and medical equipment divisions,” said an employee. “Yes, some brands have pulled out from their commitments because of the problems NMC Health had been facing – but there are still a few left and with good standing in the market.
“A deal if it goes through should come up with a decent pricing for NMC Trading.”
The administrators, from the consultancy Alvarez & Marsal, declined to comment on the sell-off status.
But a sale of NMC Trading will be the first step to claw back some of the $6.6 billion in bank exposures racked up by NMC Health. Even a few millions would prove handy.