Shares in Orchid Chemicals hit a 52-week high in early trades on the sale of its key generic injectable business but growth concerns sparked a sell-off depressing the stock 10.6 per cent on Wednesday.
Late on Tuesday, US-based Hospira Inc said it would buy Orchid Chemicals & Pharmaceuticals Ltd’s generic injectable business for $400 million, in a deal that would expand its global reach and position as the market leader.
The deal includes acquisition of Orchid’s antibiotics manufacturing complex and pharmaceutical research and development facility in Chennai as well as its generic injectable product portfolio and pipeline.
The companies also signed a long-term exclusive agreement for Orchid to supply active pharmaceutical ingredients or bulk drugs for the business Hospira is acquiring.
On an investor call on Wednesday, Orchid’s Managing Director K. Raghavendra Rao said the sale of these assets will shave off $90 million in revenue but add Rs 7-8 a share to its earnings in fiscal year ending March 2011.