Orchid Pharma Limited , a leading pharmaceutical company, has announced a significant acquisition and reported its financial results for the first quarter, amidst challenging market conditions in the global antibiotics sector.

Acquisition of Enmetazobactam Global Rights

In a transformative development, Orchid Pharma has acquired the global rights to Enmetazobactam and the trademark Exblifep from Allecra following the latter's insolvency. This acquisition gives Orchid complete control over the regulatory and commercial strategy for this novel antibiotic worldwide. The transaction is subject to certain conditions and is expected to be completed within the next three months.

Manish Dhanuka, Managing Director of Orchid Pharma, stated, "This is a transformative development for Orchid, making us the only Indian pharmaceutical company that can call itself an innovator of a new chemical entity that is internationally approved."

Key points of the acquisition include:

• Double-digit royalties previously receivable by Allecra from Advanz in Europe will now flow directly to Orchid.
• The product is already licensed in Europe, Middle East, and North African markets.
• Discussions are ongoing for several other geographies, including Brazil and Japan.
• The company aims to find a licensing partner for the U.S. market within a year of completing the acquisition.

Q1 Financial Performance

Orchid Pharma reported a significant decline in sales for the first quarter:

Market Challenges and Outlook

The company attributed the performance to an unprecedented global slowdown in the antibiotics market. Key observations include:

• Both prices and volumes are under pressure in the antibiotics sector.
• Overall quantity of oral antibiotics exports from India fell by about 30%.
• Average export prices dropped by about 15% to 20%.

Manish Dhanuka commented, "We have consciously chosen not to participate in the ongoing price war. This has been achieved through disciplined pricing, a more resilient product mix, and continued optimization of input costs."

Strategic Initiatives and Future Outlook

Despite the challenging environment, Orchid Pharma is progressing on several strategic initiatives:

1. The domestic brand Orblicef continues to perform steadily.
2. The Antimicrobial Stewardship (AMS) division is expanding its engagement with hospitals and clinicians.
3. The 7ACA project in Jammu is progressing in line with revised timelines.
4. The Cefiderocol project remains on track for a December 2026 launch.

The company expects the antibiotics industry challenges to persist through the current year, with no revival anticipated in the near future. However, management remains optimistic about long-term prospects, particularly with the acquisition of Enmetazobactam rights and ongoing strategic initiatives.

Orchid Pharma aims to navigate near-term pressures while laying the groundwork for future growth, focusing on expanding the licensing of Exblifep globally, deepening penetration of Orblicef in India, and maintaining margin discipline while selectively investing in high-impact growth areas.

Orchid Pharma , a leading pharmaceutical company, has reported mixed financial results for the first quarter, while simultaneously announcing strategic cost-reduction initiatives to bolster its profit margins amidst challenging market conditions.

Financial Performance

Orchid Pharma reported consolidated revenue from operations of ₹172.93 crore, marking a significant decrease from ₹244.41 crore in the same quarter of the previous year. Despite the revenue decline, the company managed to post a consolidated profit after tax of ₹14.91 crore, compared to ₹29.35 crore in Q1 of the previous fiscal year.

The company's performance reflects a challenging operating environment, with the following key financial highlights:

Strategic Initiatives

In response to the declining sales performance, Orchid Pharma has announced a series of strategic measures aimed at maintaining profit margins and driving medium-term growth:

1. Cost-Cutting Measures: The company is implementing comprehensive cost-reduction strategies across its operations to improve efficiency and protect profit margins.

2. API Portfolio Leverage: Orchid Pharma plans to capitalize on its existing Active Pharmaceutical Ingredients (API) portfolio, potentially exploring new market opportunities or expanding its product offerings.

3. Export Opportunities: The company is actively seeking to expand its presence in international markets, focusing on export opportunities to diversify its revenue streams.

4. Operational Efficiency: Management is committed to enhancing operational efficiency across the organization, which may include streamlining processes, optimizing resource allocation, and improving productivity.

Expansion Plans

Despite the current challenges, Orchid Pharma continues to invest in its future growth. The company reported progress on two significant capital expenditure projects:

1. Jammu Manufacturing Facility: As of June 30, Orchid Pharma has invested ₹64.61 crore out of the planned ₹90 crore for setting up a new manufacturing facility through its subsidiary, Orchid Bio-Pharma Limited (OBPL).

2. API Facility Expansion: The company has allocated ₹99.82 crore for expanding its API facility in Alathur, Tamil Nadu, with ₹0.36 crore utilized so far.

Corporate Developments

Orchid Pharma also disclosed ongoing corporate restructuring efforts:

• The company has submitted a petition to the National Company Law Tribunal (NCLT) for the amalgamation of its holding company, Dhanuka Laboratories Limited, with Orchid Pharma Limited.
• The scheme has received necessary approvals from shareholders and creditors, and is currently awaiting NCLT sanction.

Management Commentary

Manish Dhanuka, Managing Director of Orchid Pharma, stated, "While we face short-term challenges in the market, our focus remains on long-term value creation. The cost-optimization measures and strategic initiatives we are implementing are designed to strengthen our competitive position and drive sustainable growth. We are confident that our investments in new manufacturing capabilities and our robust API portfolio will position us well for future opportunities."

As Orchid Pharma navigates through this period of transformation, investors and industry observers will be closely watching the company's ability to execute its strategic plans and return to a growth trajectory in the coming quarters.