Chennai-based Orchid Chemicals & Pharmaceuticals (Orchid) has entered into a Business Transfer Agreement (BTA) with Hospira for the sale and transfer of Orchid’s penicillin and penem API business and the API facility located in Aurangabad (Maharashtra) together with an associated process R&D infrastructure located in Chennai for a total cash consideration of approximately $200 million.
This business transfer includes the related penicillin and penem product portfolio and pipeline. Approximately 830 employees would be transferred to Hospira, as part of this business transfer. As some of Orchid’s API requirements for the non-penicillin, non-penem, non-cephalosporin (NPNC) business were supplied by the Aurangabad facility, Hospira will supply such NPNC API to Orchid through a long-term agreement that both companies have entered into. This agreement builds on the existing product development and commercialization relationship between Hospira and Orchid.
Orchid would continue to supply its cephalosporin APIs to Hospira in accordance with the long-term supply contract. The proceeds from this business transfer will be utilised for de-leveraging Orchid’s debt position and also pave the entry for the company’s foray into newer product verticals.
K Raghavendra Rao, Chairman and MD, Orchid Chemicals & Pharmaceuticals said, “Orchid’s business model has crossed many milestones over the years. With investments across the pharma value chain ranging from research to API and FDF manufacturing, we have harnessed key product opportunities and built a strong revenue base. Moving on, we would like to replicate this success by creating more niche product and therapeutic verticals which will continue to power our growth. This business transfer agreement with Hospira will help us fast-track our future growth while maintaining a healthy debt profile in our balance sheet. Given the current scenario, it is a prudent decision for Orchid to monetise these verticals and bring in cash to de-leverage its debt position and fund newer growth horizons.
EP News Bureau