Chennai-based Orchid Pharma has said it is currently working on products which are going off-patent in the next few years. The company is working with generic players to develop products ahead of time and then partner with them for manufacturing further.
Manish Dhanuka, MD, Orchid Pharma, told analysts the company has a three-pronged strategy of reducing cost, increasing sales of existing products, and launching of new products. “We launched Avibactam-Ceftazidime combination which went off-patent on January 27, 2023. We were able to launch it on Day 1 through our formulation partner, and four large Indian companies launched their products through our active pharmaceutical ingredient (API).”
Stressing the importance of the third pillar, he said the company is working on it and hopefully will have new products coming in the next three to four years. “That will contribute to not just topline, but will also contribute to a higher Ebitda as newer products have better gross margins, ” he said.
According to him, Q3FY23 was the first quarter where Orchid has been PAT positive since it was taken over by Dhanuka Group. Sales in the nine months ending December 2022 were up from Rs 396 crore to Rs 456 crore. Employee expenses were down from Rs 65 crore to Rs 49 crore, a reduction of 25%. Non-employee and other expenses were down from Rs 166 crore to Rs 97 crore, a reduction of more than 40%. “Major areas of cost saving have been consumables, in which we have saved 50%, factory maintenance 30%, insurance almost 60%, consultancy, and credit loss. With these developments, our operating leverage has improved significantly,” he said.
He said the endeavour was to reduce debt and the interest burden at the earliest, and had systematically focused on conversion of all non-core assets into cash. “We have sold off loss-making formulation business. It had a loss of `61 crore in FY20, which is no more existent. The sales proceeds of this, Rs 113 crore, have been used to repay the term debt and we have received 26% equity which is valued at about Rs 45.5 crore at the face value for this business. The current term debt stands at Rs 120 crore and that is a reduction of Rs 300 crore in less than three years,” he said.