Financial Daily from THE HINDU group of publications
Tuesday, Nov 09, 2004
Orchid Chem eyes $1-b turnover
Hyderabad , Nov. 8
HAVING successfully completed the major expansions taken up at an outlay of around Rs 450 crore recently, which ensured UDFDA-compliant facilities in place, the Chennai-based Orchid Chemicals & Pharmaceuticals Ltd has chalked out a detailed marketing strategy eyeing a balance sheet size of $1 billion by 2009-10 from the current size of $160 million.
Speaking to newspersons on Monday, the Managing Director, Mr K. Raghavendra Rao, said that the company expects the new marketing strategy of aggressively expanding product portfolio and tapping the regulated markets to enable it triple business volume in the next three years and then double it further in the subsequent two years.
While the initial growth would come from cephalosporins, the growth drivers thereafter would include entry into diverse therapeutic groups, greater spread in the US, European Union and Japanese markets, and accelerated drug discovery initiatives, Mr Rao said.
The new strategy, evolved out of recommendations by McKinsey, is targeted at reversing the revenue generation levels from the regulated markets.
Against current contribution of around 20 per cent from the regulated markets, the company targets nearly 80 per cent revenues from the regulated markets in the next 3-5 years, Mr Rao said.
Orchid has identified 15 key antibiotic formulation products that are expected to propel the company's entry and growth in the US generics market.
Among these, several high-margin products are scheduled to go off-patent between 2005 and 2008. Of this, eight products are injectible antibiotics and seven, oral cephalosporins. The retail market for these products in US market is estimated at $3 billion.
The company has tied up with Apotex Corporation for distribution of eight key injectible antibiotic products in the US market. Similar tie-up for oral cephalosporin products is under discussion, Mr Rao said.
With almost all cephalosporins going off-patent before 2008 itself, the company has chalked out a strategy of expanding its product portfolio towards non-penicillin and non-cephalosporin (NPNC) range.
Towards this, an expansion plan at a capital outlay of around Rs 100 crore has been taken up, covering both Chennai and Aurangabad facilities.
Stating that both the expansion facilities would be ready by the fiscal-end, Mr Rao said that the growth from the NPNC products was expected between 2007 and 2010. On the drug discovery front, the company expects a major breakthrough, since its diabetic molecule that successfully completed phase II trials recently is expected to be out-licensed to a global pharmaceutical major before the fiscal-end for further development. However, Mr Rao said that it was difficult to predict the size of milestone payments that the company could receive from the deal, since the molecule was novel in nature.
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