Chennai-based Orchid Chemicals and Pharmaceuticals Ltd is planning to enter new high-margin, low-volume therapeutic verticals with an investment of around Rs 200 crore in the next two years.
The company by next financial year is also looking at regaining the 23 per cent business it lost to Hospira by selling its carbapenem and penicillin segment to the latter recently. Besides, it expects other business activities to contribute to the growth, said K Raghavendra Rao, chairman and managing director of Orchid Chemicals.
Speaking to reporters on the sidelines of the 20th annual general meeting recently, 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.”
“We will be sowing the seeds for this in the next 12 months,” he said. The company would be setting up a manufacturing facility for non-antibiotic finished dosage production and was open to all possibilities, including organic or inorganic methods, to set up the plant.
The investment in these new projects would be funded from the recently announced sales of Orchid's carbapenem and penicillin active pharmaceutical ingredients (API) business, which includes a manufacturing facility in Aurangabad, Maharashtra, related R&D facility in Chennai and the related products and product pipeline to the Indian subsidiary of US-based Hospira Inc.
The deal announced in August, 2012, was of $200 million (around Rs 1,112 crore at the time of the deal). Orchid had earlier sold its generic injectables business to Hospira for $400 million, and that acquisition was completed in 2010.
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. Another Rs 150 crore would go into working capital and the rest Rs 200 crore into new therapeutic segments and niche new drug delivery system developments.
“The entire money is not going to be invested in the next 12 months. It will take at least 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 grow faster,” he added.