Orchid Chemicals and Pharmaceuticals, a Rs. 1200 crore plus Chennai based pharma major, has turned the corner on account of higher sales and lower interest burden during the third quarter ended December 2010. It reported a net profit of Rs. 52.57 crore as against a net loss of Rs. 16.86 crore in the corresponding period of last year. Its EBDITA moved up to Rs. 134.95 crore from Rs. 75.90 crore. The company's net sales improved significantly by 38.3 per cent to Rs. 427.15 crore from Rs. 308.84 crore. The earning per share worked out to positive Rs. 7.48 as against negative Rs. 2.39 in the last period.

Orchid's Active Pharmaceutical Ingredients (APIs) division registered revenues of Rs. 339.27 crore as compared to Rs. 111.80 crore in the last period on account of long term exclusive API supply arrangements with Hospira and other majors. Its formulation sales touched to Rs. 91.85 crore as against Rs. 198.86 crore. Among the commercialized products in the oral cephalosporins segments, products like cefdinir capsules, cephalelxin capsules and oral suspension, cefadroxil capsules, cefprozil tablets and oral suspension & cefuroxime axetil tablets continued to show steady growth. The more recently launched products in the non-penicillin, non-cephalosporin (NPNC) segment also continued to deliver steady sales.

Orchid's cumulative filings of US DMFs stood at 81. Out of this filings 28 products are in the cephalosporin space, 40 in NPNC space, 2 in betalactam segment and 11 in the carbapenems segment. It's cumulative filings of Certificate of Suitability (COS) for the European market stood at 21. Its cumulative ANDA filings for the US market stands at 39 including the recently filed one for Aripiprazole ODT. This includes 8 para IV FTF filings. Final approved ANDAs count stood at 21 as at the end of third quarter ended December 2010.

K Raghavendra Rao, chairman and managing director, said, “Higher capacity utilisation, long term marketing agreement with Hospira for next 10 years and marketing arrangement with several other companies will push our growth rates in the coming quarters. We have already created strong value additions and want to create self identity in international market. We have taken steps to emerge as front end marketing organization, including in-licensing of products in the regulated markets. There is a strong product pipeline of over 110 product under development. We are adding 10-15 customer every year in emerging markets. The cost plus profit model adopted with Hospira is adding more to our profits.”

The company is planning to introduce more product for marketing in US and EU. At present it has 20 product in US and EU and planning to add 4-5 products every year. At present API products contribute 70 per cent to sales and 30 per cent is coming from formulation products. This ratio will change to 50:50 in next couple of years. At present promoters are holding 31 per cent stake in equity capital and same is set to increase to 36 per cent in the next year.

Raghavendra Rao added, “Our business has arrived at a strong earnings platform that will see sustainable robust growth from there on. This is despite transferring our injectable formulations business to Hospira. We have firmed up supply arrangements and have put in place a model that enables robust revenue growth with stable margins going forward. We are confident of registering strong double-digit growth coupled with more than proportionate profitability year-on-year going forward.”

For the first nine months ended December 2010, Orchid's net sales increased by 19.5 per cent to Rs. 1099 crore from Rs. 920 crore in the similar period of last year. It earned a net profit of Rs. 98.20 crore as against a net loss of s Rs. 59.82 crore.