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Rediff.com  » Business » Orchid founder may buy back stake from Ranbaxy

Orchid founder may buy back stake from Ranbaxy

August 09, 2008 15:07 IST
K Raghavendra Rao, one of the founding promoters and managing director of Orchid Chemicals and Pharmaceuticals, said he may initiate talks to buy back its 14.7 per cent stake that is now with Rexcel, a unit of pharma major Ranbaxy.

"We may not buy it ourselves, but we can find investors who will be interested in buying it. These could be investors who believe in our vision for the company or like-minded people so to say," Rao said in an interview with Business Standard.

The negotiations for a possible share buyback may start after Daiichi completes Ranbaxy acquisition. "Let the Ranbaxy-Daiichi deal settle down. We can discuss it after that," he said.

In the second week of June this year, Japan's Daiichi Sankyo had agreed to buy controlling interest in Ranbaxy at a possible cost of $3.4-4.6 billion. Rao's intention to get back 14.7 per cent stake in Orchid from Ranbaxy comes at a time when it is not clear how Daiichi looks at Ranbaxy's interest in Orchid.

Rao believes that keeping a higher stake among the founding promoters or like-minded investors would help Orchid in clinching its target of becoming a billion-dollar company in the next five years - nearly three times its current size.

The present arrangement with Ranbaxy to supply specific products to access markets across the world stands good, he said. "That is a pure commercial arrangement that we have with any of our customers and partners around the world," he added.

Rao hopes that future growth for the company is going to come from four important segments – pain management, diabetes, oncology (cancer) and infections. "We should have at least two new molecules by 2010, which can then be licenced to other manufacturers," he said.

The growth to a billion dollar company is also expected to come with minimum additional investment. "We have done that (investment) already and it has been done only to achieve the billion-dollar vision in the next five years," Rao said.

S Kalyana Ramanathan in Chennai
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