Solrex Pharmaceuticals, a wholly owned subsisidiary of Ranbaxy Laboratories, is planning to exit Chennai-based Orchid Chemicals & Pharmaceuticals Ltd, in which it holds little over 13.7% stake. The company, which increased its stake in Orchid to 14.7% during April 2008 from 9% through open market purchases, has brought down its stake to 13.73% a few months back. On Tuesday, it further pared its stake, selling 500,000 shares in the open market with a good margin.

Sources in the know told FE that the Ranbaxy arm will exit Orchid fully over a period of time as its tie up with the latter on multiple theraputics and products in April 2008 did not progress well and there is not even any product developed so far under this development.

Moreover, with the Japanese drug major Daichi acquiring majority stake in Ranbaxy earlier this year, whatever progress made came to a halt, the sources maintained.

When contacted, K Raghavendra Rao, managing director, Orchid Chemicals, said, ?Since Ranbaxy?s arm acquired the entire shares from the open market, Orchid has no first right of refusal on this part and Solrex has full liberty to sell the stake at its will.?

?We are allowed to acquire upto 5% annually and we have time till March to go for 5% acquisition from the open market. We hope to exercise this option before March 2010. We will increase our stake by minimum 5% over the next few years,? he said.

However, market sources pointed out that the promoters are finding it difficult to even retrieve their pledged shares for want of funds. Orchid promoters have pledged close to 6% of their total holding of 27.8% some time back to meet operational requirements. Some of the other major shareholders of Orchid include DSPMerrill Lynch (4.9%), LIC (4.6%), and Serum Institute (4.3%).

Following creeping acquisition, Orchid had decided to become a strategy business alliance partner of Ranbaxy to make thereputic generic drugs for the latter?s requirements at its plants in Chennai and other places. The terms and other details were not disclosed and finally the venture did not take off as planned.