Chennai-based Orchid Pharma will invest about ₹600 crore in capex towards its upcoming new manufacturing plant in Jammu set up under the production-linked incentive (PLI) scheme

In July last year, Orchid Pharma announced that its wholly-owned subsidiary, Orchid Bio Pharma, has received approval to manufacture the product ‘7-ACA’ with a committed capacity of 1,000 tonne per annum. The company’s Managing Director Manish Dhanuka had then said the approval will help in backward integration of key raw materials, thereby reducing dependency on sourcing from China and improving overall business margins.

7-ACA (7-aminocephalosporanic acid) is the core chemical structure for the synthesis of cephalosporin antibiotics and intermediates. Earlier this year, Orchid Bio Pharma also entered into an MoU with an overseas technology provider for in-licensing of 7ACA. 

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Addressing the company’s Q4 FY23 earnings call, Mridul Dhanuka,  Whole Time Director, Orchid Phrama, said the 7-ACA project is of roughly ₹500-600 crore investment. The company will also raise fresh debt to fund the 7ACA project, he added. 

Setup in 1992, Orchid Pharma is into manufacture and exports of cephalosporin family of antibiotics in oral and sterile (injectable) formats. The company manufactures active pharmaceutical ingredients (APIs) and finished dosage forms from its Alathur plant near Chennai. For sterile manufacturing, the company currently has four sterile blocks and in the process of commissioning the fifth one. 

Mridul said the company had taken a debt of ₹32 crore for the new sterile block and may spend another ₹10 crore to finish the project. He also said when Dhanuka Laboratories acquired Orchid Pharma, it had taken a debt of ₹427 crore which is now down to ₹50 crore. 

“So, that trend will continue to happen. We will make the new investment, take some fresh debt for that. Old will continue to revolve,” he added. 

The company’s sterile plant is currently operating at 90-95 per cent capacity and the new plant, which is scheduled to be operational from June, will add roughly 25 per cent capacity to Orchid Pharma’s sterile products.