Orchid Chemicals net profit falls 40%, forms JV with Italian firm

Our Corporate Bureau

Chennai, Oct 31: Orchid Chemicals and Pharmaceuticals Ltd, the Chennai-based bulk drug manufacturer, has entered into a joint venture arrangement with Iftituto Biochimico Pavese Pharma, SPA of Italy. The company is also scouting for partners to set up a joint venture facility in China. Besides, Orchid would also set up representative offices in main regulated markets to have better market access for its products. These decisions were taken at the director’s board meeting of the company, held here on Wednesday.

Top company officials told The Financial Express that the JV with the Italian company would focus on basic research and formulation of anti-peptide drugs. which is basically used as a antibiotic and for treating cancer. The JV would also focus on research in biotechnology and innovative antioxides and Novel Drug Delivery Systems (NDDS), he added. Orchid would chip in a sum of Rs 5 crore in the 50:50 joint venture and the Italian partner would bring in their intellectual property, technical knowhow and other expertise as capital. He said the company has also decided to set up a joint venture in China and is currently scouting for suitable partners for a possible tie-up. The proposed joint venture would manufacture bulk steriles based on supply from India. “The final process will be done in China. The JV may also undertake some formulations”, the official said. He said the director board’s decisions were based on a two-pronged strategy chalked out by the company top brass recently. The strategy was to strengthen current market access and carve out new profitable avenues in regulated markets. While the Chinese foray and setting up of representatuve offices were taken in tune with the first strategy, the JV with Italian company would support the latter initiative. To back these initiatives, Orchid is setting up a US FDA compliant factory in Tamil Nadu besides setting up a research centre with an animal house and toxicology centre, which would take up basic research as well.

Meanwhile, Orchid has reported a 40 per cent decline in its profit while its operating income has increased by 1.35 per cent for the second quarter ended September 30 compared to the corresponding previous period.The net profit of the company stood at Rs 2.66 crore and sales and operating income stood at Rs 93.76 crore for the quarter ended September 30, 2001, as against Rs 4.41 crore and Rs 92.51 crore respectively during the same period, previous fiscal.