Orchid sells API, R&D unit to Hospira for Rs1,113 crore to reduce debt

Orchid Chemicals and Pharmaceuticals Ltd yesterday said that it has sold some of its active pharmaceutical ingredience (API) business and related assets to US generic drug maker Hospira for around $200 million (Rs1,113  crore).

The Chennai-based company run by founder Raghavendra Rao, said that it had entered into a business transfer agreement with Hospira for the sale and transfer of its penicillin and penem API business and the API facility located in Aurangabad (Maharashtra) together with an associated process R&D infrastructure located in Chennai.

The businesses sold accounted for around 23 per cent of the total sales of the company last year, according to company officials, and around 830 employees would be transferred to Hospira, as part of the deal.

As some of Orchid's API requirements for the non-penicillin, non-penem, non-cephalosporin (NPNC) business were supplied by the Aurangabad facility, Hospira will supply such NPNC API to Orchid through a long-term agreement, complementing an existing product development and commercialisation agreement between Hospira and Orchid.

Orchid said that it would continue to supply its cephalosporin APIs to Hospira in accordance with the long-term supply contract.

The move comes after Orchid sold its generic injectables pharmaceutical business in 2009 to Lake Forest, Illinois-based Hospira for around $400 million. (See: Hospira of US buys Orchid's injectables business)

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.