Hospira, Inc., the world leader in generic injectable pharmaceuticals, is acquiring Orchid Chemicals' generic injectable finished-dosage form pharmaceuticals business for approximately US$ 400 million (Rs 1,867 crore approx). The transaction is expected to be completed in the first quarter of 2010. To help facilitate the transition process, the two companies will enter into transitional services agreements for approximately 12 months.

The acquisition includes Orchid's beta-lactam antibiotics manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities) and pharmaceutical research and development (R&D) facility at Irungattukottai, Chennai, as well as its generic injectable product portfolio and pipeline. Beta-lactam antibiotics represent a class of drugs with a wide spectrum of antibacterial activity.

In addition, the companies signed a long-term exclusive agreement for Orchid to supply active pharmaceutical ingredients (APIs) for the acquired generic injectable pharmaceuticals business. This agreement builds on the existing product development and commercialization relationship between Hospira and Orchid.

Through this transaction, Hospira will acquire a proven-quality, cost-competitive generic injectables manufacturing site that has approvals from international regulatory authorities, including the US FDA.

Further, Hospira will get the associated R&D facility and a talented base of approximately 450 employees dedicated to the development and production of beta-lactam antibiotics. It will secures full ownership of Hospira's primary beta-lactam portfolio and pipeline that were previously part of a commercialization agreement with Orchid. The transaction will help Hospira to establish a direct presence in India, providing a platform for future commercial growth.


"This acquisition aligns perfectly with Hospira's strategy to improve our margins and cash flow, by lowering our cost position for a key product line, and to invest for growth, by expanding our presence globally and reinforcing our leadership position in generic injectables," said Terry Kearney, chief operating officer, Hospira. "Orchid's quality, speed to market and productivity are hallmarks of its business. We look forward to welcoming our new colleagues from Orchid and leveraging their collective knowledge to meet the evolving needs of Hospira's customers."

"This transaction and the long-term API contract are a testimony to the competitiveness of Orchid's product portfolio in the global pharmaceuticals landscape, and its established capabilities in aseptic product manufacture. We are confident that Hospira will take our generic injectable pharmaceuticals business to even greater heights and provide enhanced career prospects to the employees being transferred. This transaction will provide Orchid with the financial flexibility to pursue new growth opportunities, and build upon our successful track record of value creation for our shareholders," said K Raghavendra Rao, managing director, Orchid.

Hospira and Orchid are committed to supporting the various current alliances and distribution arrangements of the acquired business.

Morgan Stanley is acting as financial advisor, Baker & McKenzie LLP as international legal advisor and Khaitan & Co as Indian legal advisor to Hospira. Citigroup Global Markets India Private Ltd is acting as financial advisor, Latham & Watkins LLP as international legal advisor and Crawford Bayley & Co. as Indian legal advisor to Orchid.

In 2005, Mayne Pharma Ltd (now part of Hospira) and Orchid entered into a strategic commercialization and development agreement. Subsequent agreements have added to the scope of the relationship, and the acquisition announced today gives Hospira the manufacturing/R&D capabilities, product application ownership and full commercialization rights to these products, as well as access to new product licenses and distribution partnerships. The long-term API agreement with Orchid will also ensure continuity of supply.

Hospira, Inc. is a global specialty pharmaceutical and medication delivery company dedicated to Advancing Wellness. As the world leader in specialty generic injectable pharmaceuticals, Hospira offers one of the broadest portfolios of generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management solutions. Through its products, Hospira helps improve the safety, cost and productivity of patient care. The company is headquartered in Lake Forest, Ill., USA, and has approximately 14,000 employees.