Orchid Pharma plans entry into therapeutic new segments

Last Updated: Mon, Sep 24, 2012 19:40 hrs

Orchid Chemicals and Pharmaceuticals Ltd is planning to foray into new high-margin, low volume therapeutic verticals with an investment of around Rs 200 crore in the next two years. The company is also looking at regaining the business it lost through sales of carbapenem and penicillin businesses to Hospira Inc recently, in next financial year, from other business activities, said K Raghavendra Rao, chairman and managing director of Orchid Chemicals and Pharmaceuticals Ltd.

Speaking to the reporters on the sidelines of the company’s 20th annual general meeting he said, “We will be focusing on newer therapeutic segments including oncology, ophthalmology, immunosuppressants and biotechnology along with some works on the new drug delivery methods.”

The company would be setting up manufacturing facility for non-antibiotic finished dosage production. He said that the company is open to all the possibilities including organic or inorganic methods to set up the plant.

It would also invest around Rs 200 crore over a period of next two years, in these new projects. This would be funded from the proposed sales of Orchid’s carbapenem and penicillin active pharmaceutical ingredients business, a manufacturing facility in Aurangabad, related R&D facility in Chennai and the products and product pipeline to Hospira India, subsidiary of US-based Hospira Inc. The deal announced in the end of August, 2012, was of $200 million (around Rs 1,112 crore at the time of the deal). It is to be noted that the company, in 2010, completed sales of its generic injectables business to Hospira for $400 million. The company has a total debt of around Rs 2,200 crore, and of the $200 million which would come from the new divestment, around Rs 800 crore would be to reduce the debt, said company officials recently. Another Rs 150 crore would go into working capital in the existing facilities and the rest of the Rs 200 crore into foray into new therapeutic segments and niche new drug delivery system developments. “The entire money is not going to be invested in next 12 months, at least it will take two years. And with the repayment we are making with this sales, the debt repayment pressure is not going to be significant which would help us to grow faster,” he added.

In biotech, the company is mainly looking at captive consumption, replacing some of the chemicals with enzymatic stuffs, in antibiotic field. The company has received patents for this and has a niche biotech lab and pilot facility available, which is a kind of 30 people outfit, in Sholinganallur, near Chennai.

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