Orchid Pharma to invest Rs.200 crore in niche segment

CHENNAI - City-based Orchid Chemicals and Pharmaceuticals will invest around Rs.200 crore to enter niche segments like immuno suppressants and ophthalmology.

“We are planning to venture into niche segments like immuno suppressants (drugs the prevent immune system’s activity) and ophthalmology. The investment will happen in 2012. For the current year and next we do not have any capital expenditure plans,” Chairman and Managing Director K. Raghavendra Rao told IANS.

He said the company expects around 20 percent growth this fiscal as the demand is good for its products as there is limited competition in the segment it plays.

Orchid Pharma Thursday announced redemption of $25.69 million foreign currency convertible bond (FCCB) on its due date Nov 3, 2010.

The zero coupon bonds were issued in Nov 2005. Another tranche of FCCB totalling around $117 million will mature in Nov 2012.

Rao said the company is reducing its debt burden in a major way. “We are using the proceeds of Hospira deal to reduce our debt.”

Orchid Pharma realised $400 million from US-based Hospira by transferring its injectibles business, the manufacturing complex, research and development facility at Irungattukottai near here along with employees.

The deal announced in Dec 2009 was completed in March 2010.

Between Sept 2009 and Sept 2010, the company has paid back debt of around Rs.961 crore.

Consequently for the first half of the current fiscal, the company’s interest outgo has come down to Rs.47.82 crore from Rs.108 crore paid during the corresponding period the previous year.

As of Sept 2010, the Rs.70-crore equity-based company’s debt position stands at Rs.1,726.76 crore.

According to Rao, the supply of active pharmaceutical ingredients (API) to Hospira has gone up with the latter expanding its footprint.

On the promoter’s holding, he said: “It is around 31 percent. The Ranbaxy group has exited our company sometime last month and their holding is zero in Orchid Pharma.”

The Ranbaxy group’s Rexel Pharmaceutical had acquired a tad below 15 percent stake in Orchid Pharma in 2008.

–Indo Asian News Service