US-based generic pharmaceutical firm Hospira Inc, which had acquired Orchid Chemicals and Pharmaceuticals Ltd’s generic injectables business in 2010, is in the process of infusing $275-$325 million (around Rs 1,300-1,600 crore) towards capacity expansion in India.
It has also initiated plans to qualify and validate manufacturing and related activities for certain oncology compounds in its joint venture with Ahmedabad-based Cadila Healthcare Ltd.
The company is looking at an annual capital expenditure of $105-125 million (Rs 500-600 crore) in 2012 for capacity expansion, according to a company document. It expects its first commercial products from its new manufacturing facility in Visakhapatnam, Andhra Pradesh, to be released in 2014.
The expansion of specialty injectable manufacturing capacity at Vizag was started in 2011, utilising long-term land leases acquired from Orchid, in March 2010.
“For the India capacity expansion, annual capital expenditures were $80 million (around Rs 400 crore) in 2011 and approximately $105 million to $125 million is expected in 2012 and decreasing thereafter,” it said.
Further, it is expecting higher capital expenditures related to modernisation and streamlining at its existing facilities over the next few years.
In addition, the company has initiated plans to qualify and validate manufacturing and related activities for certain oncology compounds at Zydus Hospira Oncology Private Limited (ZHOPL) in next three years.
“For both of these capacity expansion activities, Hospira expects to incur manufacturing start-up, validation (facility and product related) and registration charges in the aggregate of approximately $100 million to $120 million (around Rs 490-590 crore), for which timing will lag facility construction,” it said.
In 2011, it incurred around $3.8 million (around Rs 18.72 crore) of charges, mainly related to start-up and facility validation. Charges of $22-28 million (around Rs 108 – 138 crore) are expected in 2012.
ZHOPL received $40 million from distributions during the year ended December 31, 2011. The products manufactured through the JV accounted for around eight per cent of Hospira's net sales.