Orchid Chemicals and Pharmaceuticals Ltd has got a shot in the arm, with the US food and drug administration (FDA) giving approval for

The Orchid management had earlier disclosed in a conference call with analysts that revenues for the current year would rise between 15% and 20%, on the assumption that the generic approval for Zosyn would be received. If the approval hadn’t come, sales for the year would be flat.

Zosyn, an intravenous antibiotic, is a combination drug consisting of piperacillin and tazobactam, and is the largest selling in its segment, according to Wyeth. In calendar 2008, Zosyn’s global sales grew by 11% to $1.26 billion or Rs6,100 crore while sales in the US market grew 22% to $701 million (Rs3,381 crore). In 2009, US sales have grown by 15% but international sales are down, as it faces generic competition in many countries. Orchid has said it will launch the drug through its marketing and distribution partner Apotex Inc.

Graphics: Ahmed Raza Khan / Mint

Depending on how soon it launches the drug, by how much the price falls and the market share it grabs, Orchid’s sales and profits will get a boost in the next few quarters. After the six-month period gets over, more generics firms will enter the market, taking share from these two companies, and the drug’s price will also fall.

The market expects a windfall for Orchid, with the stock price up 25.6% to Rs159 on the National Stock Exchange on Wednesday. The company had not done well in the June quarter due to higher interest and depreciation costs and forex-related losses, which led to a loss of Rs27.7 crore.

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