The centrepiece of the deal, which is expected to complete early in 2010, is Orchid’s R&D and production facility in Irungattukottai, Chennai, which is already approved to make products for both local and overseas markets, including the US.
Hospira, which already claims to be the world leader in generic injectables, said that in addition to establishing a direct manufacturing presence in India the deal secures full ownership of the range of beta-lactam antibiotics.
These drugs, which Hospira commercialises on Orchid’s behalf under a 2005 agreement signed by its Mayne Pharma unit, represent a significant part of the firm’s product portfolio.
COO, Terry Kearney said: “The acquisition aligns perfectly with Hospira’s strategy to improve our margins and cash flow by lowering cost position for a key product line and to invest in growth by expanding our presence globally.”
In addition to the $400m, the deal also provides Orchid with a long-term active pharmaceutical ingredient (API) manufacturing contract, under which it will supply Hospira with actives for products in the acquired injectables portfolio.
The benefits of this part of the deal were stressed by Orchid’s managing director, K Raghavendra Rao, who said the contract is “a testimony to the competitiveness of Orchid’s product portfolio… and its established capabilities in aseptic product manufacture.”
The sale will leave Orchid with its contract API and oral antibiotics manufacturing business and a chance to pay back some of the INR20bn (€298m) worth of debt that currently dominates its balance sheet.