The Hindu Business Line : Orchid gearing up for overseas buys

A debt-free balance sheet will arm Orchid Chemicals with a capacity to raise debt at short notice, should an opportunity come by, the company's MD said.

Chennai , May 25

Orchid Chemicals and Pharmaceuticals believes that its business has reached such a stage that the company is now ready for acquisitions.

The company's manufacturing facilities are in place as are marketing arrangements with overseas companies. It has shifted away from selling bulk drugs in non-regulated markets like China, where margins are typically lower, to selling formulations in regulated markets.

Last year, as many as five patent-expired cephalosporin-based antibiotics were launched in the US market and the company is set to enter the European market in the current year.

`Opportune time'

According to the company's Managing Director, Mr K. Raghavendra Rao, the time has come to look for acquisitions abroad. This reasoning was one of the drivers behind the decision to go in for a $200-million GDR/FCCB issue.

As much as $160 million of the funds raised will go towards paying off debt, to make the balance sheet debt-free.

"Right now, whenever an acquisition opportunity comes our way, we simply have to wave it off," Mr Rao told Business Line recently.

A debt-free balance sheet will arm Orchid Chemicals with a capacity to raise debt at short notice, should an opportunity come by, he said.

Takeover plan

He, however, said that there was no takeover proposal under consideration at the moment, but said that something could happen in the current year.

In 2006-07, the company may also launch its anti-diabetes molecule (BLX-1002).

Mr Rao is somewhat reluctant to speak about it — he admits that his previous articulated timelines were not met and so he is not willing to commit to a new date for commercialising the molecule.

But he said that the preliminary trials showed the molecule's glucose and triglycerides lowering properties.

The molecule is being tested for these as well.

Mr Rao, while not willing to commit to a timeline, said he expected the molecule's commercialisation by September.