Hospira boosts generic injectables portfolio by acquiring Orchid’s formulation business

Hospira, Inc, the world leading generic injectable firm, has taken a booster shot by acquiring India’s Orchid Chemicals & Pharmaceuticals Ltd injectables business for nearly US $ 400 million.

Besides generic injectable finished-dosage form pharmaceuticals business, Hospira’s deal   includes Orchid’s beta-lactam antibiotics manufacturing complex and pharmaceutical research and development (R&D) facility at Irungattukottai, Chennai, as well as its generic injectable product portfolio and pipeline.

Orchid’s beta-lactam antibiotics manufacturing complex comprise cephalosporin, penicillin and carbapenem facilities.

Hospira is currentlt the world leader in generics injactables business responsible for  about 23 percent of the nearly $11 billion global generic injectables market. Hospira’s share is more than twice the share of its closest rivals.

In addition, the companies signed a long-term exclusive agreement for Orchid to supply active pharmaceutical ingredients (APIs) for the acquired generic injectable pharmaceuticals business.

The manufacturing facilities have approvals from international regulatory authorities, including the U.S. Food and Drug Administration.

This new buy-out agreement builds on the existing product development and commercialization relationship between Hospira and Orchid.

In 2005, Mayne Pharma Ltd. (now part of Hospira) and Orchid entered into a strategic commercialization and development agreement.

Subsequent agreements have added to the scope of the relationship. The new deal gives Hospira the manufacturing/R&D capabilities, product application ownership and full commercialization rights to these products, as well as access to new product licenses and distribution partnerships.

Through buying out Orchid’s injectables business, Hospira establishes a direct presence in India, providing a platform for future commercial growth, a news release stated

“This transaction and the long-term API contract are a testimony to the competitiveness of Orchid’s product portfolio in the global pharmaceuticals landscape, and its established capabilities in aseptic product manufacture,”stated K Raghavendra Rao, managing director, Orchid.

The transaction, which is expected to be completed in the first quarter of 2010, has been unanimously approved by Hospira’s and Orchid’s boards of directors.

The transaction is expected to be EPS neutral for Hospira in 2010, excluding the impact of transaction-related expenses, such as purchase accounting charges and integration costs, and the amortization of intangible assets.

Hospira, Inc Hospira, which is based in suburban Chicago, is a global specialty pharmaceutical delivery company. As the world leader in specialty generic injectable pharmaceuticals, Hospira offers one of the broadest portfolios of generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management solutions.

Headquartered in Chennai, India, Orchid Chemicals & Pharmaceuticals Ltd. is involved in the development, manufacture and marketing of diverse bulk actives, formulations and nutraceuticals. Orchid is the largest manufacturer-exporter of cephalosporin bulk actives in India and is ranked amongst the top 5-cephalosporin producers in the world. Orchid’s world-class manufacturing infrastructure includes multiple USFDA compliant API and dosage form facilities at Chennai and Aurangabad in India. Orchid has dedicated state-of-the-art GLP compliant R&D centres for API research, drug discovery and pharmaceutical research at Chennai, India.

In September, Orchid Chemicals & Pharmaceuticals Ltd received approvals from the US Food and Drug Administration (US FDA) for its antibiotic combination piperacillin and tazobactam for injection, with 180-day exclusivity to market the products in US.

Orchid Pharma got approvals covering its generic equivalents in 2.25 g, 3.375 g and 4.5 g vial as well as 40.5 g dosage forms and strengths, the company announced in a press release.

Piperacillin-tazobactam injections is commercially available as Tazocin (UK, marketed by Wyeth), Tazocin (Japan, marketed by Toyama), Tazocin (New Zealand, marketed by Wyeth), Zosyn (US, marketed by Wyeth) and Zobactin (India, marketed by GSK).

Orchid Pharma was also determined to be the first-to-file under para IV abbreviated new drug applications (ANDAs) for generic by the USFDA. No other company will be allowed to sell piperacillin and tazobactam injectable products in the strenghs approved for Orchid within this exclusivity period.

Orchid’s firt-to-file status entitles the company to have 180-day generic drug exclusivity, under applicable provisions, with considerable upsides for the company.

Orchid received approvals from several countries in EU for launch of Piperacillin-Tazobactam Injections in the financial year 2008-09.

Orchid Chemicals & Pharmaceuticals Ltd registered a turnover and operating income of Rs 1211.27 crore for the fiscal year ended March 31, 2009 compared to the previous year’s revenues of Rs 1240.14 crore.

The company registered a loss after tax of Rs 52.17 crore as against a profit after tax of Rs 184.54 crore registered during the last fiscal.

Earnings before Interest & Tax (EBIT) stood lower at Rs 157.77 crore compared to Rs 248.40 crore of the last fiscal.

The fiscal 2008-09 witnessed a plateau in the US generics business of Orchid. The dip is partly attributed to the overall recession in the US economy with the distributors and trade channels at large being cautious with orders.