Mumbai: Orchid Chemicals & Pharmaceuticals said on Thursday it has entered into an agreement to acquire US-based Karalex Pharma Llc for an undisclosed amount.
The transaction would help Orchid Chemicals generate business of about $20 million in the first year, said managing director K Raghavendra Rao, adding that they expect $100 million in revenue by the third year of the deal.
Karalex Pharma, a marketing and sales firm, has launched more than 100 generic products in the US market for various pharmaceutical companies since its launch in 2007, it said.
“We will add about 15-20 new products to Karalex’s pipeline over next three years. The first year will see two products being launched in the US market,” he added.
Orchid Chemicals expects to complete this all-cash-deal by end of June, the company said in a statement.
Last month, the drugmaker had signed an out-licensing and distribution deal with US-based Alvogen for marketing eight oral non-antibiotic formulations in US.
In December 2009, Orchid had sold off its generic injectable business to Hospira Inc for $400 million.
“With Karalex, we have a direct presence in the generic drug marketing segment in the key US market,” Rao added.
Analysts said the new development was a positive.
Orchid Chemicals would benefit from this deal considering its plans to enter the U.S. market on its own in near future, Sushant Dalmia, pharma analyst, Angel Broking, told Reuters over the telephone.
“The deal is positive because it gives Orchid a front-end exposure in the US generics market,” he added.
Robust Growth Plans Lined Up
With a direct entry into US generic market through the Karalex buy, Orchid Chemicals & Pharmaceuticals is planning to file for 50 new US FDA approvals by March 2012.
“In the current year, we have done some eight new filings and in all 25 would be done in the current as well as the next year,” Rao stated.
The drugmaker is working on four key molecules in oncology, asthma, anti-coagulation and anti-infective segments, he added.
“Post Hospira deal, we have sufficient cash and hence there are no immediate plans to raise funds,” he said.
Rao added that he plans to raise promoter holding in the company to 31% from present 26% in FY11 through open market purchases, in accordance with regulatory guidelines.
Shares of Orchid Chemicals closed at Rs151 on Thursday, up 4.61% in a Mumbai market that ended up 1.59%.