Orchid Chemicals is acquiring the bulk drug facility of Ajanta Pharmaceuticals. The price tag that the company is to pay for the Aurangabad based plant has been fixed at Rs 210 m.
Orchid is a bulk drug manufacturer. The company’s primary products are oral and sterile cephalosporins - cephalexin, cefradine and cefradroxyl. The company made placement of 10.7 million shares at Rs.175/ per share (current market price: Rs.400) to Schroder Capital.
Ajanta Pharma is a formulation company with products such as 30 +, Livo+, Figurin, Pinkoo Gripewater etc. The sale marks its exit from the bulk drug business.
Orchid is to use this facility for the manufacture of non-cephalosporin based bulk drugs. The company already has a formulation plant for the manufacture of non-cephalosporin products. The acquired plant is to be used for the bulks of non-steroidal anti-inflammatory drugs, anti-ulcerants, cardiocvascular drugs and macrolides.
Patented products contribute around 40% of the company’s turnover in value terms. With most of the patents expiring around 2001, the company needs to tighten up its cost structure. This backward integration is a step in that direction and would help the company prevent a collapse in its margins.
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