The Board of the company met today (April 28, 2006) and adopted the audited financial results for the fiscal ended March 31, 2006. The Board also recommended a dividend of 30%.

Earnings for the fourth quarter ended March 31, 2006

Orchid’s turnover for the fourth quarter ended March 31, 2006 grew to Rs 239.8 crore as against Rs 178.10 crore for the corresponding period of last fiscal. Gross profit before interest, depreciation and taxes was higher at Rs 70.11 crore compared to Rs 41.53 crore, for the corresponding quarter of the last fiscal. Net profit jumped by 17% to Rs 19.39 crore compared to Rs 16.60 crore for the corresponding quarter of last fiscal.

Quote from the Managing Director

“The fiscal (FY06) has seen a new trajectory of higher growth, revenue and profitability for the company. The establishment of high-technology projects and facilities, pipeline of international regulatory filings and approvals, entry into the high-growth US generics market, alliances with large, global majors are the major factors that have contributed to the robust earnings and growth profile of the company. The US generics entry, in particular, has been highly successful and the company has been able to garner leading market share and revenue positions in several key antibiotic product introductions in the very first year. Significant business of around Rs 250 crore this fiscal has accrued from the dosage forms business in the US. Key niche generic product introductions in the regulated markets, based on non-infringing processes and ANDA approvals will ensure continued growth momentum going forward,” said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

API (Active Pharmaceutical Ingredients) Business

During the fiscal 2005-06, Orchid integrated its Cephalosporin API business to form the backbone of its regulated market foray. A large portion of the company’s API production is being used to service the ANDA filings and formulations manufacturing. Sale of bulk actives (Oral & Sterile) accounted for Rs 547.7 crore as compared to Rs 593.09 crore registered during the previous fiscal. This excludes captive sale to the company’s formulations business.

Orchid’s regulatory roadmap progressed well and the company moved ahead in its DMF (Drug Master File) filing calendar. During the year, DMF’s were filed with the USFDA for additional key antibiotic APIs as well as the first non-antibiotic API. The company has till date filed 28 DMFs with the USFDA, maintaining the largest count in the Cephalosporin space from India.

Formulations Business

The company during the fiscal, integrated the API and formulation business under a common umbrella of Pharmaceuticals. With the successful entry into the regulated markets and ramp-up, Orchid expects to further increase the momentum and achieve continued revenue growth during the current fiscal.

During the fiscal, the finished dosage forms business established a high watermark of Rs 341.50 crore, compared to Rs 96.20 crore last year supported largely by the US generics foray that panned out from July 2005.

The domestic formulations business (Orchid Healthcare & Mano Pharma) maintained its position with a turnover of Rs 62.1 crore compared to Rs 50.20 crore last year.

US Generics

Orchid’s foray into the US generics market has yielded a strong revenue base for the company. During the fiscal, Orchid introduced 5 generic products in 11 dosage forms and 29 dosage strengths in the US market. Among these, 2 products are high-value products introduced upon patent expiry, while one is a niche generic. These products have limited competition garnering a robust market position.

The company during the fiscal under review achieved further progress in the filing of Abbreviated New Drug Applications (ANDAs) with the USFDA. The company has till date filed 26 ANDAs. During 2006-07, Orchid would continue the regulatory momentum in broader product segments.

Non-Penicillin, Non-cephalosporin (NPNC) segment

Orchid’s foray into the NPNC space is marked by a strong product basket of several molecules covering diverse therapeutic groups (CNS, CVS, ADD, Urology, Osteoporosis etc.). Some of these products would provide Para-IV / first-to-file (FTF) opportunities. Exclusive distribution alliances have been entered into with large global majors like Alpharma (now Actavis), Stada and Par Pharma for the NPNC range.

New R&D labs together with API and Formulations manufacturing infrastructure for these product groups have been commissioned. The regulatory filing process has already begun. Orchid has filed 2 DMFs and 1 ANDA in the NPNC space. Orchid is targeting to progress on the filing calendar in an aggressive pace during this year.

China JV – NCPC Orchid Pharma

The manufacturing joint venture of Orchid in China (NCPC Orchid) has progressed well. The venture has recorded revenues of USD 36 million for the fiscal 2005-06 with a net profit of around USD 2 million. New products based on technological inputs from the company have been commercialized positioning NCPC Orchid strongly in the large antibiotics market in China.

Events

During the fiscal, there were two salient events that marked Orchid’s journey.

In December 2005, the Hon’ble President of India, His Excellency Dr APJ Abdul Kalam visited Orchid’s formulations manufacturing complex located at Irungattukottai, near Chennai and lauded the company’s efforts in world-class manufacturing and state-of-the-art research.

In July 2005, Dr RA Mashelkar, Director General, Council of Scientific and Industrial Research (CSIR) visited Orchid’s R&D centre located at Sholinganallur, Chennai and inaugurated the company’s new world-class Drug Discovery (NDD) facility.