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Hospira finally completes Orchid plant acquisition

By Gareth MacDonald+

07-Jul-2014
Last updated on 07-Jul-2014 at 13:52 GMT

Hospira finally completes Orchid plant acquisition

Hospira has paid Orchid Chemicals and Pharmaceuticals $218m (€160m) for an API plant in Aurangabad, India to increase its antibiotics production capacity and cut reliance on external suppliers.

The deal – which will also see Hospira take ownership of an Orchid R&D facility in Chennai – gives the US drugmaker capacity to produce beta-lactam antibiotic active pharmaceutical ingredients (API) and shore up supply lines according to Indian division president, C. Bhaktavatsala Rao.

Hospira's acquisition of the Orchid API facility will support supply continuity of key beta-lactam antibiotic products, improve our cost position and pave the way for future API development.”

This fits with comments made by Hospira when it announced its intention to buy the Orchid plant in 2012.

At the time the firm told us that: “The API for a significant amount of the beta-lactam products we produce…is made at the facility” and said that owning the plant would improve the cost position of the penem and penicillin products in makes.

Hospira’s desire to bring more ingredient production in-house was underlined by CEO Michael Ball last December , who said the firm – which then produced around 10% of the actives it uses – was aiming to produce 50% of its APIs by 2018.

Debt plan

Completion of the deal follows just three months after Orchid announced a corporate debt restructuring plan that Hospira spokeswoman Tareta Adams said had moved the facility acquisition closer.

This was echoed by Orchid managing director, K Raghavendra Rao, who said: "The consummation of the BTA [business transfer agreement] with Hospira and the implementation of the approved CDR Package has facilitated the scaling down of the debt levels, restructuring of the balance debt and has also ensured working capital availability for the company that will help resurrect operations."

Orchid will continue to supply Hospira with cephalosporin APIs, which it produces at its facility in Alathur, south of Chennai.

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