Orchid Chemicals and Pharmaceuticals (Orchid Pharma) is planning to double its revenues from Rs 1,259.81 crore, as on March 31, 2010, over the next three years. To meet the target, the company is planning acquisitions, mainly in the front-end marketing in the regulated markets and for new product segments.
Meanwhile, the company has said its debt has declined to Rs 1,300 crore, saving an estimated Rs 150 crore in interest costs in 2010-11 due to the sale of its generic injectable business to US-based Hospira.
“We expect to double our sales base in three years. The focus will be on the non-penicillin non-cephalosporin (NPNC) segment, process marketing alliances in the US and Europe, launching of products and investing in acquisitions,” according to company’s communication to its shareholders.
The company has said it possess marketing alliances in the US and Europe with four major players including Actavis, North Star, Stada (Dava) and Alvogen for 31 NPNC products with a combined market opportunity for over $50 billion. “Over the next three years, we will launch over 20 products in the US market,” said the company.
The company added, it does not need to invest more in the existing infrastructure and business mode. The company’s base is capable of yielding a double-digit growth based on the present products.
“We envisage we will need to invest in acquisitions and niche product segments. Our inorganic growth strategy is focused on acquiring front-end marketing outfits in the regulated markets which will not involve large capital outlays,” according to the company’s communication.
It may be noted that the company has entered into an agreement to acquire US-based generics marketing company Karalex Pharma LLC in an all-cash deal to establish the company’s presence in generic sales and marketing.
More From This Section
For the new product segments, the company has said that it does not envisage heavy investments and going forward it expects to generate positive cash flows which will be used for investments in capital expenditure.
“The company’s capital expenditure plan ran concurrently with product launches and others expansions. This model was mostly funded out of the debt, putting stress on the balance sheet.”
The company’s debt grew to Rs 2,985 crore as on March 29, 2010, from Rs 1,029 crore, as on March 31, 2006, an increase of around 190 per cent. “The debt : equity ratio increased to 4.4 from 1.3, while liquidly was squeezed on account of payback delays from the existing products and the product pipeline.”
To reduce the burden, the company sold its generic injectable formulations business for around $400 million to US-based Hospira. The company has repaid a debt of around Rs 1,400 crore in March 2010 from the proceedings. The debt declined to Rs 1,300 crore, reducing an estimated Rs 150 crore in interest costs in 2010-11.
It may be noted that the company had a debt of Rs 2,600 crore against a ne tworth of Rs 670 crore as on March 31, 2009.