The £200m (€159m) acquisition is Hospira’s second from Orchid’s Indian portfolio since 2010, when it took over a finished-dose antibiotic facility in Chennai.
Orchid has since been supplying the drugmaker with beta-lactam – the active used in antibiotic products including carbapenems and penicillins– from the recently purchased Aurangabad factory.
Speaking to Outsourcing-pharma.com, Hospira spokesman Dan Rosenberg said the decision to buy the API facility was both a bid to boost presence in India, and a cost cutting measure.
“We’re making this acquisition in part because the API for a significant amount of the beta-lactam products we produce, the penems and penicillins, is made at the facility we’re buying,” he said. “API is a major component of the cost to produce these products, so this transaction will improve the cost position of the penem and penicillin beta lactam products we fill/finish at Hospira India.”
Under the deal, Hospira also took the plant’s associated research and development (R&D) facility.
“Process R&D is an integral part of API development and ensuring cost-competitiveness,” Rosenberg added, saying it would also help support future development of beta-lactam API.
Orchid’s head of corporate communications and investor relations Ch Ram told us no job cuts are expected for the 830-strong workforce being transferred to Hospira as part of the deal.
The firm has seen a host of US Food and Drug Administration (FDA) woes of late, including a 2010 closure Rocky Mount injectables plant – the pumped in millions of dollars to fix the issues.
Last week the company also received a warning over its Costa Rica medical device manufacturing facility, after it failed to take corrective action over faulty products.
When asked if API production – rather than finished dose or devices – could be a move away from its troubled finished dose and device businesses, Rosenburg said Hospira is keeping an “open mind relative to other API opportunities that may arise.”
He added: “While we remain focused on remediation, we continue to look toward the future as we seek to meet the needs of healthcare providers and patients. In addition to this acquisition, last week we announced a project to modernize and expand capabilities at Rocky Mount, and we’re also constructing a facility in Vizag, India, that will add significant capacity to support future growth and provide manufacturing flexibility.”
He said however the Aurangabad takeover was specifically to support its other Indian facility.
In a statement, Bhaktavatsala Rao, MD at Hospira India also said antibiotic production is an increasing focus for Hospira, especially in India.