Hospira acquires API manufacturing and R&D facilities from Orchid for about $218 million

Jul 7 2014

Hospira, Inc. (NYSE: HSP), the world's leading provider of injectable drugs and infusion technologies, today announced it has completed the acquisition of an active pharmaceutical ingredient (API) manufacturing facility and an associated research and development (R&D) facility from Orchid Chemicals & Pharmaceuticals Ltd. (BSE: 524372, NSE: ORCHIDCHEM), a leading Indian pharmaceuticals company, for approximately $218 million, after settling prior advances of approximately $30 million.

"Hospira's acquisition of the Orchid API facility will support supply continuity of key beta-lactam antibiotic products, improve our cost position and pave the way for future API development," said Dr. C. Bhaktavatsala Rao, president and managing director, Hospira India. "We're committed to the antibiotics space, and with our new colleagues from Orchid, we will continue to bring high-quality, lower-cost products to patients around the world."

The acquisition enables Hospira, already a leader in certain critical antibiotic injectable products, to vertically integrate into the beta-lactam antibiotic APIs (penems and penicillins), and is also expected to improve Hospira's cost position in this therapeutic space. In addition, backward integration into these beta-lactam APIs will improve the company's security of supply. Beta-lactam antibiotics represent a class of drugs with a wide spectrum of antibacterial activity.

The API manufacturing facility -- which is located in Aurangabad, India -- has capabilities for manufacturing sterile APIs and employs approximately 665 employees including chemists, engineers and technicians. Hospira's purchase also includes an associated Orchid R&D facility based in Chennai, India, that will be directed primarily to beta-lactam and other API development with approximately 110 scientific personnel.

Post deal, Orchid retains its cephalosporin API business and facilities, and also certain non-antibiotic, non-sterile businesses and facilities it owns. Orchid will continue to supply Hospira with cephalosporin APIs.

The transaction between Hospira and Orchid, announced in August 2012, has received all necessary regulatory and legal approvals.