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Hospira To Acquire Active Pharmaceutical Ingredient Manufacturing And R&D Facilities

LAKE FOREST, Ill., Aug. 29, 2012 /PRNewswire/ --  Hospira, Inc. (NYSE: HSP), the world's leading provider of injectable drugs and infusion technologies, today announced an agreement for Hospira to acquire an active pharmaceutical ingredient (API) manufacturing facility, together with an associated research and development (R&D) facility, from Orchid Chemicals & Pharmaceuticals Ltd. (BSE: 524372, NSE: ORCHIDCHEM), a leading Indian pharmaceuticals company, for approximately $200 million. Acquisition of the modern, U.S. Food and Drug Administration (FDA)-approved facility is expected to reduce Hospira's costs, support continuity of supply of key antibiotic products and pave the way for future API development.

"Our decision to acquire Orchid's world-class API facility demonstrates Hospira's continued dedication to the antibiotics space, enhancing cost-competitiveness and ensuring continuity of supply," said Dr. C. Bhaktavatsala Rao, managing director, Hospira India. "This is a top-of-the-line API manufacturing facility that has been recognized by industry leaders for its high standards. We look forward to welcoming our new colleagues from Orchid and leveraging their expertise to continue to bring high quality, lower-cost products to patients around the world."

The proposed acquisition, which follows Hospira's 2010 purchase of Orchid's generic injectable finished-dosage form pharmaceuticals business, will enable Hospira to vertically integrate into certain critical beta-lactam antibiotic APIs (penems and penicillins), and is also expected to improve Hospira's standard cost position in this therapeutic space. In addition, controlling the source of these beta-lactam APIs will improve the company's security of supply. Orchid will retain its cephalosporin API business and facilities, and will continue to supply Hospira with this associated API.

The Aurangabad, India, facility, staffed by approximately 640 employees including chemists, engineers and technicians, received the International Society of Pharmaceutical Engineering's (ISPE) Facility of the Year Award for Regional Excellence in 2009. Constructed in 2000, the facility includes 50,000 square meters of space. Hospira's purchase also includes an associated Orchid R&D facility based in Chennai that will be primarily directed to beta-lactam and other APIs with approximately 160 scientific personnel and an additional 30 employees supporting the facilities.

Beta-lactam antibiotics represent a class of drugs with a wide spectrum of antibacterial activity. Hospira's imipenem-cilastatin and meropenem injectable beta-lactams have both had successful introductions recently in a number of markets, including Europe and the United States, and today command leading market positions.

Transaction Details

The transaction has been unanimously approved by Hospira's and Orchid's boards of directors. It is subject to Orchid's shareholders', regulatory and legal approvals, as well as customary closing conditions. Assuming all necessary approvals are secured, the transaction is expected to be completed in the fourth quarter of 2012. To help facilitate the transition process, the two companies will enter into transitional services agreements of various lengths.

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