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Chennai-based Orchid Chemicals & Pharmaceuticals is raising $40 million from foreign investors to facilitate its foray into pharmaceutical formulations. The company has given a mandate to Dutch investment bank Rabo Finance.

The Rs 334 crore pharma company needs funds as it has recently ventured into making pharmaceutical formulations. Orchid is traditionally a bulk drugs manufacturer and announced its formulations foray in October last year.

"When we want to raise funds, all options are open. At the appropriate time we shall use the appropriate mix," company managing director K Raghavendra Rao told Business Standard. Company executives had earlier said Orchid was looking at a combination of debt and equity to fund plans for the formulations foray.

Sources said the company had received expressions of interest from investors for $20 million. However, differences over valuations were proving to be a stumbling block to a deal, they added.In the meantime, Orchid has reportedly also put on the backburner plans to start a greenfield unit for non-cephalosporin bulk drugs such as azithromycin, and roxythromycin. The company had acquired land for the purpose in Cuddalore, Tamil Nadu. The investment required is to the tune of Rs 50 crore.

The company's formulations business is being run through its division Orchid Healthcare. The division has launched about 6 formulations in the domestic market and 20 more may follow. Orchid Healthcare has projected a 10-fold growth in turnover in 1999-2000 backed by new product introductions as well as exports. The division plans to touch a turnover of Rs 50 crore with Rs 10 crore from exports. The therapeutic segments identified for growth include anti-infectives, osteorporosis, cardiovascular, anti-pain etc, and cepholosporins.

The company has been negotiating with foreign formulation companies for licensing arrangements, and molecule synthesis at its research facility. It is also looking at brand acquisitions as part of its long-term growth strategy.

Orchid has also been in talks with Pfizer and Hoechst Marion Roussel for their formulation manufacturing plants but neither deal materialised. >