Orchid in marketing tie-up with Par Pharma

Orchid Chemicals and Pharmaceuticals has picked up its second marketing partner in the US. On May 24 it tied up with Par Pharmaceuticals, a subsidiary of US-based Pharmaceutical Resources, for marketing its oral cephalosporin formulations in the US.

Orchid has a tie-up with Apotex Corp of US for marketing its sterile formulations. The pact with Par helps the company cover its entire range of formulations targetting the $3 billion US market.

K Raghavendra Rao, managing director of Orchid, said the company was expecting a substantial jump in revenues and income during 2005-08, when some of its key products are scheduled to go off-patent.

Orchid will access regulatory support from Par when required. Par will also pay Orchid towards its research and development.

And ANDA costs over a period of time until such costs are reimbursed in respect of each product. However, Orchid will retain the ownership of the ANDAs.

The company's generic cephalosporin formulation products will be manufactured at its Irungattukotai plant and will be exclusively supplied to Par.

Without divulging any indicative numbers, Rao said the profit-sharing arrangement with Par was favourable to Orchid, both in the case of the on-patent and off-patent formulations. The exclusivity clause, besides being subject to certain operating covenants, leaves some room for Orchid to route some portion of its formulations through the bulk-drug exports.

Scott Tarriff, president and chief executive officer, Pharmaceuticals Resources, said, "This alliance will provide us an entry into a therapeutic category where we do not currently have a presence."

Having covered its ground in the US, Orchid now plans to focus on tie-ups in Europe. "We are looking at it. Par and Apotex may come into this plan. But we are looking beyond them as well," Rao said.

Back home, Orchid is struggling with its domestic formulation business, which it is planning to consolidate. Rao said, "The acquired formulations are doing good. But the problem is with our original formulations. If we do not attain a critical mass here, we could look at exiting the business. But, for now, we expect to double the business in the next year."

Orchid's original antibiotic formulations are under immense price pressure in the domestic market to the point of being in the red.

The company, however, has posted impressive growth since it acquired Mano Pharma in January 2003. The Mano acquisition brought with it formulations and neutraceuticals for neuropsychiatry, cardiovascular and diabetes.

C B Rao, deputy managing director of Orchid, said the company's domestic formulation business has grown from Rs 25 crore in 2001-02 to Rs 60 crore in 2002-03 and to Rs 100 crore in 2003-04. He attributed the growth largely to the Mano Pharma products.

Orchid is now setting up a critical-care / hospital division, which will take care of its antibiotics products. The company will handle the retail business of its antibiotics in co-ordination with those of Mano Pharma.