Orchid Chemicals & Pharmaceuticals, a Chennai based Rs 1300 crore plus generic pharma company, has entered into an agreement to acquire Karalex Pharma, LLC, a US based generic marketing and sales services company headquartered in New Jersey through an all-cash deal for an undisclosed amount. The transaction is expected to close by this months subject to customary closing conditions. With the announcement of acquisition, Orchid scrip moved up by over Rs 6 to Rs 151 on the BSE.
Karalex Pharma is a leading provider of generic pharmaceuticals focused exclusively on the US healthcare market. It has launched over 100 generic pharmaceutical products in the US with a combined value in excess of US$ 1 billion.
K Raghavendra Rao, managing director, Orchid, said, “We are happy that we have established our presence in the generic sales and marketing area with this acquisition. This acquisition will provide a strong commercial US-based sales capability to Orchid, paving the way for synergistic returns from our upcoming and long-term strategic generic pharmaceuticals pipeline comprising key first-to-file and Paragraph-IV products. This move also endows Orchid, for the first time, with a complete end-to-end coverage capability of the entire generic pharmaceutical business cycle from product development to product sales and would enable Orchid to internalize value.”
While giving more details about the acquisition, Rao said that the deal is likely to add revenue of US$ 20 million in the current year and has potential to reach $100 million in next few years. Orchid filed 35 NDA in US and received 23 approval. The company is planning to file 25 products each in next two year, mostly in the non-antibiotics area of anti-diabetes, anti-inflammation, CNS and cardiology. At present four molecules are in various development stages. The company is set to double its size in the next three years by adding about 15-20 new products. In the current year it will launch cost competitive two new products. The joint venture in China has improved its working and likely to generate revenues of $ 60 million with higher profit in the current year.
The company is growing fast and strengthening its balance sheet. At present its total borrowings stood at Rs 1052 crore and FCCBs payable stood at Rs 650 crore. The company is to pay FCCBs worth Rs 100 crore in October 2010 and remaining FCCBs of Rs 550 crore will be payable by 2012. Though the company is not making any additional investment in APIs segment, it is likely to invest in Dosage forms through internal accruals.
Meanwhile, Orchid has completed the transaction for sale and transfer of Orchid’s generic injectable finished dosage forms pharmaceuticals business to Hospira Healthcare India Pvt. Ltd, a subsidiary of Hospira, Inc., a leading global specialty pharmaceutical and medication delivery company. The sale and transfer transaction includes Orchid’s betalactam antibiotics injectable manufacturing complex and formulations R&D facility at Irungattukottai, Chennai as well as its generic injectable product portfolio and pipeline.