Orchid Chemicals & Pharmaceuticals said on Thursday that major stakeholder Solrex Pharmaceuticals is linked to Ranbaxy Laboratories, but it did not expect a takeover attempt.
Privately held Solrex has acquired an 11.4 per cent stake in Chennai-based Orchid, a bulk drugs and formulations maker, in just two weeks. Orchid shares have doubled in recent weeks amid Solrex's buying and speculation it was linked to Ranbaxy and was preparing a takeover, but they fell 3 per cent to Rs 225.85 on Thursday.
Orchid Deputy Managing Director C B Rao told reporters in Tokyo that Solrex is understood to be an investment unit of Ranbaxy, India's biggest drug maker by sales.
"But I would conclude it is a ...value pick (rather) than a takeover attempt," he said. Shares in Orchid had dropped sharply after Bear Stearns was forced to quickly sell Orchid stock in the midst of the credit crisis, he said.
A Ranbaxy spokesman has said the company did not believe in hostile takeovers. Rao was in Tokyo for the launch of Orchid's Japan unit.
The company has formed a wholly-owned subsidiary in Japan called Orchid Pharma Japan K K (Orchid Japan). Orchid Japan will drive the company's foray into the high potential Japanese generics market by delivering cost-effective drugs to the Japanese healthcare system, Orchid MD K Raghavendra Rao said in a statement.
He said that the company is aiming for sales of $100 million from the Japanese market over the next five years.
"We expect to be among the leading players in the Japanese market which will grow at a rapid pace in the coming years due to an increasing recognition in the government and healthcare sectors of the need for quality generic medicines," Rao said.
He estimated the generics market in Japan at $2.5 billion to double to $5 billion in the next five years.
Orchid has emerged as a leading cephalosporin generics player in the US market and is set to achieve a similar presence in the European generic antibiotic space. To this end, the company has filed over 15 dossiers with European regulatory authorities, Rao added.
It has developed a diversified product range covering several therapeutic areas, and has US FDA and UK MHRA approved manufacturing facilities for both oral and sterile dosage forms, besides marketing tie-ups with global players.
According to research firm Sharekhan.com, niche product opportunities in the USA are driving Orchid's growth, and its forays into the European and Canadian markets are expected to further boost sales in the coming years.
Orchid reported consolidated topline revenues of Rs 985 crore (Rs 9.85 billion) in 2006-07, and is expected to grow to Rs 1,200 crore (Rs 12 billion) in 2007-08, Rs 1,600 crore (Rs 16 billion) in 2008-09 and Rs 2,000 crore (Rs 20 billion) in 2009-10.
Consolidated topline for the third quarter of 2007-08 ended December 2007 rose 40 per cent to Rs 347.38 crore (Rs 3.47 billion) while net profit rose 94 per cent to Rs 49.96 crore (Rs 499 million).
