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May 31, 2001
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Money > Business Headlines > Report May 31, 2001 |
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IFC to invest in Orchid ChemicalsEla DuttIndia Abroad Correspondent in Washington The International Finance Corporation, the private sector funding arm of the World Bank, just announced it will invest in Orchid Chemicals & Pharmaceuticals Ltd., India, to help the company transform itself from a predominantly bulk drug business into a well-integrated, research and technology driven, pharmaceutical enterprise. This is IFC's first foray into the pharmaceutical sector in South Asia. Orchid's $116 million expansion and diversification program is expected to help improve its portfolio and diversify into anti-ulcerants, analgesics, and biotechnology products; obtain US Food and Drug Administration and UK Medicines Control Agency certifications to expand into regulated markets; set up state-of-the-art manufacturing facilities and bolster its distribution network; and enhance its research and development capabilities by focusing on drug discovery and drug delivery systems. The project objective is to help increase the global availability of high-quality drugs at lower costs to other developing countries. "It also demonstrates how Indian companies can shift gears to meet WTO-induced regulatory reforms and use their strong comparative advantages of low-cost production and a pool of trained scientists toward development of new technologies," said IFC. IFC's investment includes subscribing to $20 million worth of foreign currency convertible bonds to be issued by Orchid and a loan for IFC's own account of $10 million. The FCCBs will be convertible into equity shares of the company at a future date after which IFC will hold about 13.5 percent of the company's share capital. This is the first time that IFC is using FCCBs to make an investment in India. Orchid was set up by K Raghavendra Rao, a first-generation entrepreneur. Starting from a one-product company in 1994, Orchid has built up a wide portfolio of oral and sterile antibiotics and nutritional supplements with a turnover of $80 million in financial year 2001. |
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