Cash-strapped and debt-ridden, Orchid Chemicals & Pharmaceuticals has decided to exit NCPC-Orchid Pharmaceuticals, its 50:50 manufacturing jv in China. The company will sell its 50% stake to its Chinese partner (NCPC) for a total cash consideration of $13.9 million. While the company claimed that the exit was a strategic move to consolidate its operations in India, it follows the sale of its injectable formulations business, penicillin and penem API business and its facilities, and the R&D centre to Hospira for a total consideration of $600 million.
Orchid’s chairman & managing director, K Raghavendra Rao, said, “With the local Chinese players fast integrating, the operating conditions have grown quite competitive in China. Moreover, the products that the JV manufactures and markets in the local Chinese market have reached a mature stage, resulting in flat growth prospects going forward. Hence, it was a prudent decision to relinquish our stake to the partner and exit the JV.”
Meanwhile, Orchid reported a net loss of R19.95 crore for Q2 as against a net profit of R23.43 crore same quarter last financial year. Total income declined 21% to R330.54 crore as compared with R419.49 crore in the year-ago period.