Orchid acquires Ajanta''s bulk drug unit

Orchid Chemicals and Pharmaceuticals Ltd., the Chennai-based cephalosporin manufacturer, has signed a Rs 21 crore deal with Mumbai-based Ajanta Pharma Ltd. for acquiring the latter's 18-acre bulk drug facility at Waluj near Aurangabad. The due diligence process is currently on and the unit is likely to be formally transferred to Orchid's name by end January, 2000.

The deal signals Ajanta Pharma's exit from the bulk drug business. The two-year old facility had cost Ajanta Pharma Rs 30 crore and was used for producing cephalosporins and macrolide antibiotics. The unit, which is considered to be of a standard laid down by the US Food and Drug Administration, contributed about Rs 45 crore to Ajanta Pharma's March 1999 sales of Rs 140 crore. Orchid is likely to retain the entire workforce of 100 people currently employed at the unit

The acquisition marks a deviation from Orchid's earlier policy of achieving organic growth through in-house project development from greenfield stage. This has been done to reduce the time-to-market of the non-cephalopsorin formulations business, where the company intends to focus aggressively. Its formulations are marketed through a recently created division - Orchid Healthcare.

The company intends to dedicate the acquired facility to non-cephalosporin bulk drugs such as non-steroidal anti-inflammatory drugs, anti-ulcerants, cardiovascular drugs and macrolides. Presently, Orchid's non-cephalosporin product portfolio comprises nimesulide (in tablets, gel and suspension form), nifidipine, omeprazole, diltiazem, azithromycin, clarithromycin and tramadol tablets. Of these, only nimesulide and tramadol are marketed in India. The non-cephalosporin brands contribute 20 per cent to Orchid Healthcare's Rs 25 crore turnover.

Ajanta Pharma intends to utilise the sale proceed in R&D and joint ventures overseas for its formulations business.