Orchid to take the GDR route

Global depository receipts (GDRs) seem to have caught the fancy of Indian pharma and healthcare players. After Apollo Hospitals Group, Chennai-based Orchid Pharmaceuticals and Chemicals is preparing for a GDR issue scheduled tentatively for the last week of this month. The proposal will be taken up for approval at the AGM to be held on July 18.

The GDRs, designed to raise $100 million with a greenshoe option of 15 per cent, will be listed on the Luxembourg Stock Exchange.

The company, however, refused to reveal the names of the lead bankers until the AGM's approval.

C B Rao, deputy managing director, said the company preferred a GDR float to a public offering in the country as GDRs provided them exposure to international regulatory mechanisms.

Besides, the process of issuing GDRs is quicker "" in 2-3 months. The overall capital pullout was also larger, as it tapped into a larger capital pool.

Orchid has two alliances in the US for 16 products and three tie-ups in the antibiotic segment, and it is scouting for more.

Talks are under way for more such alliances to service Europe, Australia and Asia. Although these areas were hitherto unpenetrated, Rao clarifies that there is no plan to front-end the formulations overseas through a wholly owned subsidiary as of now.

On the ensuing expansion plans, Rao said, "We plan to get into non-antibiotics segment specifically, non-penicillin and non-cephalosporin. A second plant will be constructed at Aurangabad for this, while the R&D labs & formulations will be taken care of in the new plant at Chennai."

Funds raised via the GDR route would only fast track the process. We can then file ANDAs ( abbreviated new drug applications) more aggressively and undertake facility upgradation and development. Also some capital restructuring would be undertaken including repayment of debt."

The company is also looking to increase the product breadth by developing drugs in country- and region-specific product groups like anti-diabetics, cardio-vascular ailments, osteoporosis etc.

In a sector where competition is heating up by the minute, Orchid sees itself surging ahead by looking at niche areas with 'first to file' opportunities, exclusivity barriers and drugs with complex chemistry.

A combination of such strategic opportunities would keep its pie safe from contenders, Rao believes.