Orchid sells API operations to Hospira for $200 mn

Chennai-based global pharma major, Orchid Chemicals & Pharmaceuticals (Orchid) has announced that it had entered into a Business Transfer Agreement (BTA) with US generic company -Hospira for the sale and transfer of Orchid’s Penicillin and Penem API business and the API facility located in Aurangabad (Maharashtra) together with an associated process R&D infrastructure located in Chennai for a total cash consideration of approximately $200 million.

This business transfer includes the related Penicillin and Penem product portfolio and pipeline. Approximately 830 employees would be transferred to Hospira, as part of this business transfer, the company said in a press release.

As some of Orchid’s API requirements for the Non-penicillin, Non-Penem, Non-cephalosporin (NPNC) business were supplied by the Aurangabad facility, Hospira will supply such NPNC API to Orchid through a long-term agreement that both companies have entered into.

Orchid would continue to supply its Cephalosporin APIs to Hospira in accordance with the long-term supply contract.

The proceeds from this business transfer will be utilized for de-leveraging Orchid’s debt position and also pave the entry for the company’s foray into newer product verticals.

“This business transfer agreement with Hospira will help us fast-track our future growth while maintaining a healthy debt profile in our balance sheet. Given the current scenario, it is a prudent decision for Orchid to monetize these verticals and bring in cash to de-leverage its debt position and fund newer growth horizons,” said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.