Chennai, Dec 16 (IANS) Orchid Chemicals may not have sold the ‘family silver’ - its $90 million generic injectible business - to the $3.6 billion Hospira Inc - but has sold at least a pearl.
The whole deal has been codenamed within the company as Project Oyster.

Orchid Chemical Wednesday announced the sale of its generic injectible business to Hospira for $400 million.

“The division fetches around $90 million turnover and an EBITA (earnings before interest, tax and amortisation) of around $40 million. The gross asset is valued at Rs.600 crore and the net asset block is Rs.450 crore,” managing director K. Raghavendra Rao told reporters Wednesday.

According to sources in the know, the whole deal had its genesis when Ranbaxy Laboratories through its subsidiary Solrex picked up a tad below 15 percent in Orchid Chemicals last year.

“Hospira was sourcing the betalactam products from Orchid Chemicals for quite some time and offered its helping hand to stave off any takeover threats,” said a source close to the Indian company on the condition of anonymity.

However, nothing much happened between Hospira and Orchid Chemicals.

But it initiated a different process between the two - the sale/buy of generic injectible business and plant - codenamed by Orchid Chemicals as Project Oyster.

Hospira which has a 50:50 joint venture with the Ahmedabad-based Zydus Cadilla for manufacture of oncological drugs looked at Orchid Chemicals’ betalactam plant near here as an apt fit as it did not have a presence in that segment.

What further attracted the American company to Orchid Chemicals’ plant is the regulatory approvals, including one from USFDA (US Food and Drug Administration), it had.

“Setting up a greenfield plant and getting necessary regulatory approval may take around three years. But acquiring a plant with necessary approvals will cut short the time to market,” Sumant Ramachandra, chief scientific officer told IANS.

However, Rao is breathing easy now as Orchid Chemicals is less attractive for some time to come for any suitors.

“I hold 27 percent stake in the company. There are well-wishers who hold sizeable stake. As such there is no threat of takeover,” he said.