Orchid Pharma Ltd on Thursday said that it will transfer its non-penicillin, non-cephalosporin (NPNC) formulations division to a new joint venture with a subsidiary of US-based generic pharmaceuticals company Bionpharma.
The consideration for the transaction is expected to be up to Rs 170 crore ($22.9 million) in a combination of cash and equity stake in the joint venture, said Orchid Pharma in a stock market disclosure.
The joint venture will be split 76:24 between Orchid Pharma and Bionpharma's subsidiary. It was not clarified which will own the majority stake.
Orchid Pharma said the transaction is expected to boost its NPNC formulations business in regulated markets. NPNC are largely non-antibiotics which include pharmaceutical products in cardiovascular, neurology, anti-diabetic and nutrients segments.
In the 2020 annual report, Chennai-based Orchid Pharma had said that efforts were made to improve manufacturing processes to reduce costs at the NPNC division. The company’s Abbreviated New Drug Application (ANDA) approvals for the US market stood at 29 in the NPNC space, according to the report.
Orchid Pharma was among the 28 large corporate defaulters in the Reserve Bank of India’s second list of debt-laden companies that were referred for insolvency in August 2017. It owed a total of Rs 3,200 crore to a consortium of 24 banks.
Last year, Dhanuka Laboratories Ltd took over Orchid Pharma as per an insolvency resolution plan that was approved by courts and the debt-laden company’s lenders.
Dhanuka had won approval for its resolution plan from the National Company Law Tribunal in June 2019 itself. However, it was contested at an appeals tribunal and the Supreme Court.
In March 2020, the Supreme Court set aside the appeals court’s order against Dhanuka’s resolution plan to acquire the Chennai-based drugmaker.