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Orchid Chemicals and Pharmaceuticals plans to invest Rs 200 crore this year on niche therapeutic products. It also plans to set up a new manufacturing facility for these therapeutic formulations.
“We have identified three niche products which will give us a diversified competitive positioning in the market as these will be difficult to manufacture,” said Mr K. Raghavendra Rao, Chairman and Managing Director, without divulging the possible areas. The investment for these will be met through internal accruals, said Mr Raghavendra.
(Therapeutic products generally include dietary supplements and herbal medicines, diabetes products, blood-related products, and those used in cellular and tissue therapies.)
Orchid is also in engaged in phase 1 molecule testing in the areas of diabetes, obesity, oncology and inflammation.
To raise Rs 1,000 cr
The company, which has pledged around 70 per cent of promoter holding, hopes to reduce it by half in a few months. It also plans to raise up to Rs 1,000 crore through all forms of equity and debt instruments (both foreign and local) to repay an FCCB (foreign currency convertible bonds) debt. The Rs 720-crore FCCB is payable by February 2012.
Orchid’s cephalosporin API manufacturing facility in Alathur, Chennai, recently received a closure notice from the Tamil Nadu Pollution Control Board over “non-compliance” of solid waste disposal norms. Mr Rao said Orchid is working with the pollution control board to resolve the issue soon. “We have adequate stocks and working capital – so currently there is no impact on revenues. But if the issue persists for long, there could be some impact.”
The company has for long had debt issues which prompted Orchid to sell its injectables business to US-based Hospira last year. Orchid today has an API supply contract with Hospira, including cephalosporin. Supplies to Hospira accounts for 21 per cent of Orchid’s total turnover.
Q1 net profit down 28%
For the quarter ended June 30, 2011, Orchid’s net profit dipped 28 per cent to Rs 15.54 crore. Net sales grew 16 per cent to Rs 383.59 crore (standalone).
Orchid manufactures APIs and formulations across segments like anti-infectives, anti-inflammatory, cardio vascular, nutraceuticals and oral and sterile products for the developed markets of US, Europe and Japan. It also has a small presence in the branded drugs market in India, which it hopes to increase this year.
In FY2010-11, Orchid clocked a turnover of Rs 1,663 crore.
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