Hospira of US buys Orchid’s injectables business

US drug maker Hospira Inc will buy the injectable pharmaceuticals business of Chennai-based Orchid Chemicals & Pharmaceuticals Ltd for $400 million (Rs1,860 crore), the two companies said in a joint statement late on Tuesday.

K Raghavendra Rao

The acquisition will include Orchid's antibiotics manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities) and pharmaceutical research and development facility at Irungattukottai in Chennai, as well as its generic injectable product portfolio and pipeline.

The statement also said that the companies also signed a long-term exclusive agreement for Orchid to supply active ingredients for the generic injectable pharmaceuticals business.

On an investor call today, Orchid managing director  K Raghavendra Rao said he expects the sale of its generic injectable drug business to Hospira to add Rs7-8 a share to earnings in financial 2011. He said about Rs1,400 crore of the proceeds will be used to reduce to repay debt.

The two companies have had relationships since 2005. Hospira, a leading global injectable generics player, is the marketing partner for Orchid in Europe for injectable anti-infection drugs Piperacillin-Tazobactam, for which Orchid enjoys 180-day marketing exclusivity in the US.

The drug, a copycat version of Wyeth's product, does not have competition and will contribute over $80 million in the US during the 180-day period.