General News

Hospira buys Orchid API site in India

Facility will cut costs, facilitate integration

US-based Hospira, which claims to be the world’s largest maker of injectable drugs and infusion technologies, has acquired an FDA-approved API manufacturing facility at Aurangabad, India, and an associated R&D facility in Chennai from Indian drugs firm Orchid Chemicals & Pharmaceuticals for about $200 million. The deal should be completed in Q4.

The company said that this transaction “is expected to reduce Hospira's costs, support continuity of supply of key antibiotic products and pave the way for future API development”. As a result, Hospira will be able to integrate vertically into penems and penicillins, which are critical beta-lactam APIs for antibiotics and a significant proportion of its costs.

The Aurangabad facility, which was built employs about 640 and covers 50,000 m2. In 2009, it won the International Society of Pharmaceutical Engineering's Facility of the Year Award for Regional Excellence. The Chennai R&D site employs about 160 scientific personnel and 30 others. No job cuts are anticipated as a result of the transaction.

This deal follows on from the 2010 purchase by Hospira of Orchid's generic injectable finished dosage form pharmaceuticals business, also in Chennai. Orchid will retain its cephalosporin API business and facilities and will continue to supply Hospira with the associated API, as it has hitherto done from the Aurangabad site.

Hospira has also announced plans to invest $85 million, possibly rising to $270 million over the course of the decade, to modernise and expand its site in Rocky Mount, North Carolina. This will create about 200 jobs. The announcement followed on from the resolution of long-term quality problems at the site that forced Hospira to halt operations from 2010, with a big impact on its contract manufacturing business.

The company has also received an FDA warning letter over its failure to take corrective actions about faulty medical devices produced at its site in Costa Rica. There has been speculation that it may exit finished doses and devices in order to focus on APIs, but as yet Hospira has not commented on this.