Hospira to Acquire Orchid's Generic Injectable Pharmaceutical Business

Hospira (Lake Forest, IL), a specialty pharmaceutical company, has agreed to acquire the generic injectable finished-dosage form pharmaceutical business of Orchid Chemicals & Pharmaceuticals (Chennai, Tamil, Nadu, India) for $400 million.

The acquisition includes Orchid's beta-lactam antibiotics manufacturing complex (consisting of cephalosporin, penicillin, and carbapenem facilities), a pharmaceutical research and development (R&D) facility at Irungattukottai in Chennai, as well as its generic injectable product portfolio and pipeline. The companies also signed a long-term exclusive agreement for Orchid to supply active pharmaceutical ingredients (APIs) for the acquired generic injectable pharmaceuticals business.

This agreement builds on the existing product development and commercialization relationship between Hospira and Orchid. "This acquisition aligns perfectly with Hospira's strategy to improve our margins and cash flow, by lowering our cost position for a key product line, and to invest for growth, by expanding our presence globally and reinforcing our leadership position in generic injectables," said Terry Kearney, chief operating officer of Hospira, in a company press release.

In 2005, Mayne Pharma Ltd. (now part of Hospira) and Orchid entered into a strategic commercialization and development agreement. Subsequent agreements added to the scope of the relationship, and the announced acquisition provides Hospira the manufacturing and R&D capabilities, product application ownership, and full commercialization rights to these products, as well as access to new product licenses and distribution partnerships.

The long-term API agreement with Orchid will also ensure continuity of supply, said Hospira in a company release. The transaction has been unanimously approved by Hospira's and Orchid's boards of directors. It is subject to Orchid's shareholders, regulatory, and legal approvals as well as customary closing conditions. The transaction is expected to be completed in the first quarter of 2010. To help facilitate the transition process, the two companies will enter into transitional services agreements for approximately 12 months.