The Chennai-based pharma major Orchid Chemicals & Pharmaceuticals Ltd. (Orchid) has announced its plans to raise up to USD 75 million to fund its long-term growth plans, including further diversification, strengthening its foray into the US generics and other regulated markets and setting up of additional US FDA complainant infrastructure for drug development.

The company sources said the funds raised through Foreign Currency Convertible Bonds (FCCBs) in the international markets, would be utilized to further diversify and strengthen its foray into the US generics and other regulated markets. Additionally, the company will establish new US FDA compliant infrastructure to develop and manufacture drugs in diverse therapeutic groups, with emphasis on non-penicillin, non-cephalosporin products.

‘Orchid has already drawn up project plans in this area based on select products, which offer considerable market potential. In addition, Orchid would be utilizing part-proceeds to accelerate drug discovery programs, which have already generated interesting leads, now in advanced pre-clinical evaluation’ said the sources.

Orchid had earlier implemented an investment strategy involving participation from Schroder Ventures & International Finance Corporation, under which US FDA complaint facilities have been established for cephalosporin bulk drugs and formulations.

Orchid’s board that met yesterday considered the issue of FCCBs in the international markets and has decided to increase the authorized share capital of the company from the present Rs 34 crore (3.4 crore equity shares of Rs 10 each) to Rs 45 crore (4.5 crore equity shares of Rs 10 each).

The board has also considered allotment of 2 million warrants convertible into equity shares to the promoters based on SEBI regulations. This would enable the promoters retain their shareholding percentage even after conversion of the bonds into equity. The warrants will have a lock-in period of 3 years from the date of allotment. The company has scheduled an Extraordinary General Meeting on April 10, 2004 to get the approval of its shareholders for the proposals, informed a company release.

“We have completed the planned investments in the cephalosporin segment and are confident of significant revenues going forward. Exhibit batches for key products have been taken at our new US FDA compliant formulations facility aimed at the regulated markets and we should start filing ANDAs (Abbreviated New Drug Applications) from this month”, said K Raghavendra Rao, managing director, Orchid Chemicals & Pharmaceuticals Ltd.

Over the last few years, Orchid has initiated a strategic transformation into the more lucrative regulated markets of US and Europe. In line with this strategy, the company has commissioned several new manufacturing blocks and upgraded existing infrastructure to comply with US FDA and other regulatory standards. Orchid has since got many international regulatory approvals for its oral and sterile cephalosporin products, including two approvals from the US FDA and six Certificates of Suitability (CoS) from the European Directorate for the Quality of Medicines (EDQM).

The company expects a quantum jump in performance from 2005, as key cephalosporin products would be going off patent from that year progressively, noted the sources.