Orchid Chemicals to exit Chinese joint venture

Orchid Chemicals and Pharmaceuticals Ltd. (Orchid Pharma), on Friday, said that it was exiting its 50:50 manufacturing joint venture in China.

The 50 per cent stake that Orchid holds in the joint venture company, NCPC-Orchid Pharmaceuticals, will be transferred to the partner company, North China Pharmaceutical Corporation (NCPC), for a cash of $13.9 million (RMB 87.5 million), according to a company release.

Orchid had, in 2002, entered into a 50:50 joint venture with NCPC to set up a cephalosporin API manufacturing facility in Shijiazhuang, China.

(Active Pharmaceutical Ingredients (API) or bulk drugs are the principal ingredients for finished pharmaceutical products. APIs cannot be administered directly to the patient, and other inactive substances called excipients are added to stabilise the mixture into an end-product, which is called formulation.)

Out of the $10 million equity capital, Orchid’s investment was $5 million.

Orchid had commissioned the first phase of its joint venture ‘sterile crystalline’ facility in China in collaboration with NCPC and sterile lyophilisation in the second phase.

The joint venture was engaged in producing sterile cephalosporin bulk actives and formulations and marketed in China.

The company was performing well. Sources said the joint venture company was a profitable one and registered a sales turnover of $52.11 million during 2011-12.

Commenting on the development, Orchid’s Chairman and Managing Director K. Raghavendra Rao said in a release, “With the local Chinese players fast integrating, the operating conditions have grown quite competitive in China. Moreover, the products that the joint venture manufactures and markets in the local Chinese market have reached a mature stage resulting in flat growth prospects going forward. Hence, it was a prudent decision to relinquish our stake to the partner and exit the JV”.

Posts loss in Q2

Meanwhile, the company achieved a total income of Rs.330.54 crore ($62.53 million) for the quarter ended September 30, 2012, against Rs.419.49 crore ($79.36 million) in the corresponding quarter of the previous fiscal. Earnings before interest, depreciation, tax and amortisation stood at Rs.85.67 crore ($16.20 million) against Rs.99.47 crore ($18.82 million).

The loss before tax stood at Rs.30.35 crore ($5.74 million) against a profit of Rs.23.43 crore ($4.43 million). The net loss was Rs.19.95 crore ($3.77 million) against a profit of Rs.23.43 crore ($4.43 million).

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Printable version | May 14, 2021 5:08:40 PM |

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