Competition Commission of India today said it has approved a proposed sale by Orchid Chemicals and Pharmaceuticals Ltd (OCPL) of its certain assets to Hospira Healthcare.
Under the deal, OCPL has agreed to sell its Betaculum API (Active Pharmaceutical Ingredients) business along with its manufacturing facilities, as also another manufacturing facility in Aurangabad and an R&D facility in Chennai to Hospira Healthcare India Pvt Ltd (HHIPL), a 100% subsidiary of US-based Hospira Inc.
However, the deal does not include certain oral formulation businesses of OCPL as also some API assets.
Approving the deal, the CCI said that "the horizontal overlap between the products offered by OCPL and HHIPL in the domestic market in India is insignificant".
The deal also contained a non-compete clause that stipulates that OCPL and its promoter K Raghvendra Rao cannot undertake certain business activities pertaining to the "transferred business" for a period of eight years and five years, respectively.
CCI said it expects non-compete obligations, if deemed necessary to be incorporated in deals, to be "reasonable" in terms of duration, business activities, geographic areas and persons being subjected to any restraint.
After being asked by CCI to justify the non-compete clauses of the deal, OCPL and HHIPL offered to modify the terms to limit the duration of non-compete obligation to four years and excluded activities regarding research, development and testing of certain new molecules.
The CCI said it has accepted the modifications and asked the companies to incorporate the same in the proposed deal.
