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BL Research Bureau

The European Union’s nod to Orchid Chemicals & Pharmaceuticals for selling generic Piperacillin Tazobactam (Tazo-Pip) injections is major positive.

Tazo-Pip, an antibacterial combination product used for the treatment of moderate to severe infections, has a $250 million market (over Rs 1,000 crore) in the EU.

It was one of the fastest growing antibiotic injectables in 2007, growing by 19 per cent.

The Orchid stock closed nearly 4 per cent up at Rs 259.40 on the NSE. Sandoz and Orchid are the only generic companies with approved facilities for injectable penicillin and this makes the product (launch to start from this quarter) a big revenue spinner for the Indian company.

To capitalise on the opportunity, Orchid will launch Tazo-Pip through marketing partner Hospira.

Orchid’s overseas marketing partner (on profit-sharing basis) strategy reduces the need to have a front-end presence in a target market, such as European Union member States and also shortens the “time to market” for highly competed drugs.

In case Tazo-Pip, Orchid will have to contend with very limited competition and could garner a minimum of 50 per cent market share in this product.

Although it is difficult to predict the profitability before actual launch, the product is certainly a high-margin item.

Tazo-Pip might not have another competitor for the next 12 months, post launch in the EU. Orchid has also received nod from Canadian regulator and is looking at launching the drug in US, as soon as it resolves some issues.

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