Consolidated earnings for the fiscal ended March 31, 2012 (FY12)

Orchid’s strategy of entering into long-term supply arrangements with marquee clients has paid off well and continues to contribute to the earnings.

• Turnover of Rs 1902.04 crore (USD 373.8 million) in FY12 compared to Rs 1785.57 crore (USD 350.9 million) during FY11
• Earnings before Interest, Depreciation and Tax stood at Rs 412.73 crore (USD 81.1 million) for the fiscal under review compared to Rs 401.12 crore (USD 78.8 million) registered during FY11
• Profit before tax (PBT) for the fiscal ended March 31, 2012 stood at Rs 79.32 crore (USD 15.6 million) compared to Rs 150.87 crore (USD 29.6 million) for the corresponding fiscal
• The Net Profit (PAT) for the fiscal ended March 31, 2012 stood at Rs 97.48 crore (USD 19.2 million) compared to Rs 156.19 crore (USD 30.7 million) for the corresponding fiscal
• EPS for the fiscal ended March 31, 2012 stood at Rs 13.84

* 1 US$ = Rs 50.88

Orchid’s board that met today to adopt the audited financial results for the fiscal ended March 31, 2012 recommended a dividend of 30%.

From the Chairman & Managing Director

“The financial year FY11-12 witnessed progress covering several key aspects of the business from revenue growth, profitability, increased product-market expansion, unlocking of working capital levels and the FCCB redemption. Despite a few setbacks during the year like the API plant closure, higher interest costs, the weakening rupee which impacted the FCCB redemption and the fire accident at the R&D centre, it is satisfying that we are on a growth path and are confident of delivering value going forward” said Mr. K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Update on Regulatory filings

Formulations

United States
During the financial year 2012, Orchid continued its focus on the US generics market with the number of regulatory filings steadily increasing. The cumulative ANDA (Abbreviated New Drug Application) filings count in the US stands at 43. This includes 8 Para IV FTF (First–To–File) filings. The break-up of the total ANDA filings is 13 in the Cephalosporins space and 30 in the NPNC (Non-penicillin, Non-cephalosporin) space.

On the approvals front too, Orchid made good progress. The count of approved ANDAs stood at 29 as of March 2012. The break-up of the approved ANDAs comprises of 11 in Cephalosporin space and 18 in the NPNC space.

European Union
The cumulative count of Marketing Authorizations (MAs) filed in the EU region stood at 28 as of March 2012 with 13 in the Cephalosporin space and 15 in the NPNC space.

On the approvals front, Orchid has received approvals for 17 MAs comprising 9 in the Cephalosporin space and 8 in the NPNC space.

Active Pharmaceutical Ingredients (API)

During the fiscal year 2012, Orchid increased the filing count of its US DMFs to 89. Of these 28 DMFs pertain to the Cephalosporin category, 47 to NPNCs, 2 to the Betalactam segment and 12 to the Carbapenems segment.

Similarly, the filings of COS (Certificate of Suitability) for the European market stood at 21 which includes 14 in Cephalosporin space, 6 in the NPNC space and 1 in the Betalactam segment.

Naratriptan Tablets are the generic equivalent of GSK’s Amerge tablets.

Olanzapine tablets are the generic equivalent of Eli Lilly’s Zyprexa® tablets. For the twelve months ending December 31, 2011 the total sales for this product in the US were approximately US$ 3.3 billion. (Source: IMS Health, MAT 2011).

• Revenue grows by 4%, Rs 496.8 crore (US$ 93.6 million) in Q3 FY12 versus Rs 478.5 crore (US$ 90.1 million) in Q3 FY11
• EBITDA of Rs 129.0 crore (US$ 24.3 million) in Q3 FY12 versus Rs 131.3 crore (US$ 24.7 million) in Q3 FY11
• Profit before Tax (before exceptional item loss of Rs 49.07 crore) of Rs 41.1 crore (US$ 7.8 million) in Q3 FY12 compared to Rs 71.9 crore (US$ 13.5 million) during Q3 FY11
• At the net level, the company registered a loss (after exceptional item loss of Rs 49.07 crore) of Rs 11.06 crore (US$ 2.0 million) in Q3 FY12 compared to Rs 56.62 crore (US$ 10.7 million) during Q3 FY11

The net profit of the company for the 9-months ended December 31, 2011 stood at Rs 82.2 crore representing a strong performance for the period. The net profit for H1 FY12 stood at Rs 37.65 crore.

Financial highlights for 9-months ended December 31, 2011 (Earnings on consolidated basis)

• Revenue grows by 13% - Rs 1411.8 crore (US$ 265.9 million) in the 9-months ended December 31, 2011 versus Rs 1245.6 crore (US$ 234.6 million) in the corresponding period of last fiscal
• EBITDA growth of 9% - Rs 324.1 crore (US$ 61 million) in the 9-months ended December 31, 2011 versus Rs 296.3 crore (US$ 55.8 million) in the same period of last fiscal
• Profit before Tax (before exceptional item loss of Rs 81.6 crore / extraordinary item gain of Rs 80 crore) of Rs 91.9 crore (US$ 17.3 million) in the 9-months ended December 31, 2011 compared to Rs 116.3 crore (US$ 21.9 million) during the corresponding period of last fiscal
• Net Profit after Tax (PAT) (after exceptional item loss of Rs 81.6 crore / extraordinary item gain of Rs 80 crore) of Rs 82.2 crore (US$ 15.5 million) in the 9-months ended December 31, 2011 compared to Rs 97.4 crore (US$ 18.4 million) registered during the same period last fiscal

From the Chairman & Managing Director
"The operational performance of the company continues to register strong growth. Higher interest charges due to the hardening of interest rates coupled with the exchange loss on outstanding foreign currency loans have impacted the bottomline in the 3rd quarter. The exceptional item loss is a point-in-time restatement and with the rupee strengthening the company will have a write-back on this account", said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Performance of Key Business Segments

Global API business
The Global API (Active Pharmaceutical Ingredients) business of Orchid continued to witness strong growth backed by the long-term supply arrangements with key, large global majors.

During Q3 FY12, the API sales of Orchid rose to Rs 353.3 crore (US$ 66.5 million) as compared to Rs 329.66 crore (US$ 62.1 million), registered during the corresponding period of last fiscal.

Global Generics business (Formulations)
Aided by key launches in the oral formulations space, the Global Generic formulations business of Orchid maintained its growth momentum.

During the quarter ended December 31, 2011 (Q3 FY12), the formulations division registered a sale (global, including India) of Rs 114.0 crore (US$ 21.5 million) as compared to a sale of Rs 90.24 crore (US$ 17.0 million) achieved during the corresponding 3rd quarter of last fiscal.

* 1 US$ = Rs 53.1

The Phase I study was conducted to evaluate the safety, tolerability, pharmacokinetic and pharmacodynamic effects of OCID 2987 at escalating single or repeated doses on healthy male volunteers. OCID 2987 was well tolerated up to the highest doses administered in both single and repeat dose studies and did not demonstrate a potential for nausea/emesis, a common unacceptable side-effect with most PDE4 inhibitors. There were no serious adverse events or any cardiac safety concerns reported in the study.

"We are extremely pleased with the results of the Phase I study of OCID 2987 and are committed to moving the molecule further in clinical development for the treatment of COPD and other inflammatory diseases. Given the positive results achieved in the earlier animal trials and now the Phase 1 trial, we are confident of successfully completing the further trials as we move forward." said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Orchid's drug discovery efforts are conducted through its wholly-owned subsidiary, Orchid Research Laboratories Limited.

About OCID 2987

OCID 2987 is a proprietary novel PDE4 inhibitor with a distinct chemical scaffold. In preclinical studies, OCID 2987 has demonstrated excellent preclinical pharmacological properties in models of inflammatory diseases, including respiratory diseases such as COPD and asthma. OCID 2987 has no interaction with more than 150 other targets tested; has a once a day pharmacokinetic profile and exhibits an excellent safety and toxicological profile.

Under the terms of the Agreement, Orchid is eligible to receive payments totaling more than US$ 100 million associated with the achievement of various research and development milestones involving multiple candidates. Orchid is also eligible to receive significant royalties on worldwide net sales of any products commercialized under the Agreement.

In September 2008, the two companies announced a collaborative research agreement focused on the discovery, development and commercialization of novel agents for the treatment of bacterial and fungal infections for which Orchid received an upfront payment.

Orchid's drug discovery efforts are conducted through its wholly-owned subsidiary, Orchid Research Laboratories.

"We are fully geared to redeem the maturing FCCBs. The ECB sanction that we have received, coupled with our internal accruals will enable us to comfortably redeem the outstanding FCCBs on the due date. With over 85% of Orchid's sales being exports billed in US$, the company has a natural hedge against currency fluctuations", said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Financial highlights for Q2 FY12 (On consolidated basis)

- Total income of Rs 465.71 crore (US$ 95.1 million) - growth of 16%
- EBIDTA of Rs 104.36 crore (US$ 21.3 million) - growth of 47%
- PBT (before exceptional item loss of Rs 86.45 crore / extraordinary item gain of Rs 80 crore) of Rs 27.39 crore (US$ 5.6 million) - growth of 105%
- PAT (after exceptional item loss of Rs 86.45 crore / extraordinary item gain of Rs 80 crore) of Rs 20.72 crore (US$ 4.23 million) - growth of 20%

Financial highlights for H1 FY12 (On Standalone basis)

- Total income of Rs 803.08 crore (US$ 163.96 million) - growth of 12%
- EBIDTA of Rs 193.57 crore (US$ 39.52 million) - growth of 21%
- PBT (before exceptional item loss of Rs 88.19 crore / extraordinary item gain of Rs 80 crore) of Rs 51.48 crore (US$ 10.51 million) - growth of 6%
- PAT (after exceptional item loss of Rs 88.19 crore / extraordinary item gain of Rs 80 crore) of Rs 38.97 crore (US$ 7.95 million)

Financial highlights for H1 FY12 (On consolidated basis)

- Total income of Rs 914.94 crore (US$ 186.8 million) - growth of 19%
- EBIDTA of Rs 195.06 crore (US$ 39.8 million) - growth of 23%
- PBT (before exceptional item loss of Rs 88.19 crore / extraordinary item gain of Rs 80 crore) of Rs 50.75 crore (US$ 10.36 million) - growth of 14%
- PAT (after exceptional item loss of Rs 88.19 crore / extraordinary item gain of Rs 80 crore) of Rs 37.65 crore (US$ 7.69 million)

Q2 earnings (for the quarter ended September 30, 2011) - Standalone
Orchid achieved a total income of Rs 419.49 crore (US$ 85.6 million) for the quarter ended September 30, 2011 (Q2 FY12) in comparison to Rs 381.80 (US$ 77.9 million) crore registered during the corresponding quarter of the last fiscal. Earnings before Interest, Depreciation & Tax (EBIDTA) stood at Rs 105.92 crore (US$ 21.6 million) compared to Rs 76.12 crore (US$ 15.54 million) of the corresponding quarter of last year. The Profit before Tax (PBT) (before exceptional / extraordinary item) for the second quarter (Q2) was at Rs 29.87 crore (US$ 6.09 million) compared to Rs 19.83 crore (US$ 4.05 million) registered during the corresponding Q2 of the last fiscal. The net profit after tax (after exceptional / extraordinary item) stood at Rs 23.43 crore (US$ 4.78 million) compared to Rs 24.01 crore (US$ 4.90 million) of the corresponding Q2 of the last fiscal. Earnings per share stood at Rs 3.33 during this period.

Q2 earnings (for the quarter ended September 30, 2011) - Consolidated
Orchid achieved a total income of Rs 465.71 crore (US$ 95.1 million) for the quarter ended September 30, 2011 (Q2 FY12) in comparison to Rs 402.46 crore (US$ 82.17 million) registered during the corresponding quarter of the last fiscal. Earnings before Interest, Depreciation & Tax (EBIDTA) stood at Rs 104.36 crore (US$ 21.3 million) compared to Rs 70.94 crore (US$ 14.48 million) of the corresponding quarter of last year. The Profit before Tax (PBT) (before exceptional / extraordinary item) for the second quarter (Q2) was Rs 27.39 crore (US$ 5.6 million) compared to Rs 13.30 crore (US$ 2.71 million) during the corresponding Q2 of the last fiscal. The net profit after tax (after exceptional / extraordinary item) stood at Rs 20.72 crore (US$ 4.23 million) compared to Rs 17.32 crore (US$ 3.54 million) of the corresponding Q2 of the last fiscal. Earnings per share stood at Rs 2.94 during this period.

H1 earnings (for the half year ended September 30, 2011) - Standalone
On a standalone basis, Orchid’s revenues for the half-year (H1) ended September 30, 2011 stood at Rs 803.08 crore (US$ 163.96 million) compared to Rs 712.73 crore (US$ 145.51 million) registered during the corresponding period of last fiscal. Earnings before Interest, Depreciation & Tax (EBIDTA) before exceptional / extraordinary item stood at Rs 193.57 crore (US$ 39.52 million) compared to Rs 160.02 crore (US$ 32.67 million) registered during the corresponding H1 of the last fiscal. The net profit after tax (after exceptional / extraordinary item) stood at Rs 38.97 crore (US$ 7.95 million) compared to Rs 45.63 crore (US$ 9.32 million) of the corresponding H1 of the last fiscal. Earnings per share stood at Rs 5.53 during this period.

H1 earnings (for the half year ended September 30, 2011) - Consolidated
On a consolidated basis, Orchid’s revenues for the half-year (H1) ended September 30, 2011 rose by 19% to Rs 914.94 crore (US$ 186.8 million) compared to Rs 767.02 crore (US$ 156.60 million) registered during the corresponding period of last fiscal. Earnings before Interest, Depreciation & Tax (EBIDTA) before exceptional / extraordinary item stood at Rs 195.06 crore (US$ 39.8 million) compared to Rs 158.07 crore (US$ 32.27 million) registered during the corresponding H1 of the last fiscal. The net profit after tax (after exceptional / extraordinary item) stood at Rs 37.65 crore (US$ 7.69 million) compared to Rs 40.86 crore (US$ 8.34 million) of the corresponding H1 of the last fiscal. Earnings per share stood at Rs 5.34 during this period.

* 1 US$ = Rs 48.98

Comment from the Chairman & Managing Director
"Our operational performance continues to tread on a strong path. The business model change that we had initiated post the injectable business transfer to Hospira last year continues to augur well with the several long-term supply contracts entered into with large global players paving the way for continued robust earnings", said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Regulatory update

Filings

API
In the API (Active Pharmaceutical Ingredients) space, Orchid’s cumulative filings of DMFs stood at 86. The break-up of the total filings is 27 in the Cephalosporin space, 46 in NPNC (Non-penicillin, Non-cephalosporin) space, 2 in the Betalactam segment and 11 in the Carbapenems segment.

The cumulative filings of COS (Certificate of Suitability) for the European market stood at 21 which includes 14 in Cephalosporin space, 6 in NPNC space and 1 in the Betalactam segment.

Finished Dosage Forms (FDF)
Orchid's cumulative ANDA filings stand at 43. This includes 8 Para IV FTF (First–To–File) filings. The break-up of the total ANDAs filed is 13 in the Cephalosporins space and 30 in the NPNC space. In the EU region the cumulative count of Marketing Authorizations (MAs) filed stood at 25. The break-up of the total MA filings is 13 in the Cephalosporin space and 12 in the NPNC space.

Approvals

The approved ANDAs count rose to 28 (including 6 tentative approvals) at the end of the 2nd quarter of FY12. The break-up of the total ANDAs approved comprises of 11 in Cephalosporin space and 17 in NPNC space.

In the EU region the cumulative count of Marketing Authorizations (MA) approved stands at 21. The break-up of the total MA approval count is 9 in the Cephalosporin space and 12 in the Oral NPNC space.

With staunch efforts on product development, Orchid’s filing and approval count is poised to increase in the coming months and quarters.

The Alathur API plant that had earlier received a Closure Notice from the Tamil Nadu Pollution Control Board (TNPCB) has now been cleared and production activities will commence immediately.

Orchid Chemicals & Pharmaceuticals Ltd. (Orchid) achieved a total income of Rs 383.59 crore for the quarter ended June 30, 2011 (Q1 FY12) in comparison to Rs 330.93 crore registered during the corresponding first quarter of last fiscal. Earnings before Interest, Depreciation and Tax (EBIDTA) stood at Rs 85.90 crore compared to Rs 79.08 crore of the corresponding quarter of last year. The Profit before Tax (PBT) stood at Rs 19.85 crore compared to Rs 24.10 crore of the Q1 of last fiscal. Profit after Tax (PAT) stood at Rs 15.54 crore compared to Rs 21.61 crore for the Q1 of last fiscal.

Consolidated earnings for the first quarter ended June 30, 2011 (Q1 FY12)

On a consolidated basis, Orchid registered a turnover of Rs 449.23 crore for the quarter ended June 30, 2011 (Q1 FY12) in comparison to Rs 364.57 crore registered during the corresponding first quarter of last fiscal. Earnings before Interest, Depreciation and Tax (EBIDTA) stood at Rs 88.94 crore compared to Rs 82.43 crore registered during the corresponding quarter of last fiscal. At the net level, the Company registered a profit after Tax (PAT) of Rs 16.92 crore compared to Rs 23.53 crore for the Q1 of last fiscal.

From the Managing Director

"Our performance continues on a strong trajectory and we are confident of scaling further heights in the quarters to come. We have entered into long-term contractual agreements with large MNCs including Hospira for supply of our niche APIs and formulations which have augured well. Given the less-competitive landscape for most of our products, we are confident of a strong growth going forward”, said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Regulatory update

API

In the API (Active Pharmaceutical Ingredients) space, Orchid's cumulative filings of its US DMFs stood at 83. The break-up of the total filings is 27 in the Cephalosporin space, 43 in NPNC space, 2 in the Betalactam segment and 11 in the Carbapenems segment.

The cumulative filings of COS (Certificate of Suitability) for the European market stood at 21 which includes 14 in Cephalosporin space, 6 in NPNC space and 1 in the Betalactam segment.

Formulations

Filings

Orchid's cumulative ANDA filings for the US market stands at 43. This includes 8 Para IV FTF (First–To–File) filings. Out of this we have already settled with the Innovator for 4 products. The break-up of the total ANDAs filed are 13 in Cephalosporins space and 30 in NPNC space.

In the EU region the cumulative count of Marketing Authorizations (MAs) filed stood at 25. The break-up of the total MA filings is 13 in Cephalosporin space and 12 in the NPNC space.

Approvals

The final approved ANDAs count stood at 21 at the end of the 1st quarter of FY12. The break-up of the total final ANDA approval count comprises of 11 in Cephalosporin space and 10 in NPNC space.

In the EU region the cumulative count of Marketing Authorizations (MA) approved stood at 21. The break-up of the total MA approval count is 9 in the Cephalosporin space and 12 in the Oral NPNC space.

The company is in active dialogue with the TNPCB officials and is confident of resolving the issues and bringing the plant to a fully operational stage at the earliest.

This successful inspection would help the continuing supply of the niche APIs manufactured by Orchid in this location to the developed markets.

Orchid's performance during FY11 (year ended March 31, 2011) transcends new growth frontiers.

• Orchid's turnover in FY11 rose by 33% to Rs 1785.57 crore (USD 400 million) compared to Rs 1343.45 crore (USD 301 million) during FY10 (fiscal ended March 31, 2010).
• Earnings before Interest, Depreciation and Tax (EBIDTA) stood at Rs 421.81 crore for the fiscal under review.
• Profit before tax (PBT) for the fiscal ended March 31, 2011 stood at Rs 171.56 crore.
• Net Profit (PAT) stood at Rs 156.19 crore for the fiscal ended March 2011.
• EPS for the fiscal ended March 31, 2011 stood at Rs 22.17.

Figures for the previous year ended March 31, 2010 are not comparable as the company transferred its Injectable formulation business to Hospira in March 2010.

Orchid's board that met today to adopt the audited financial results for the fiscal ended March 31, 2011 recommended a dividend of 30%.

Highlights of the Assets & Liabilities statement for the fiscal ended March 31, 2011.

(Consolidated basis)

• Reduced receivable days - 105 days in FY11 (200 days in FY10).
• Lower Inventory days - 126 days in FY11 (164 days in FY10).
• Net Debt / equity ratio stood at 1.52 (Net debt Rs 1633.18 crore & Net worth Rs 1069 crore).

Quote from the Chairman & Managing Director

"We believe that our performance of the fiscal year 2010-11 is the start of a strong, growth journey for the company. We have put in place an operating canvas that incorporates long term supply arrangements involving niche products thereby ensuring sustainable growth with strong margins going forward. Our shift to a more sustainable and robust business model has also helped us significantly deleverage our balance sheet improving key parameters like working capital, debt equity and asset turnover. Given the strong order book and supply arrangements, we are confident of delivering a 25% increase in revenues and a more than proportionate growth in profits during the current financial year FY12," said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Regulatory update

Formulations

United States
Orchid's cumulative ANDA (Abbreviated New Drug Application) filings for the US market stands at 42. This includes 8 Para IV FTF (First–To–File) filings. The break-up of the total ANDA filings is 13 in Cephalosporins space and 29 in the NPNC (Non-penicillin, Non-cephalosporin) space.

The final approved ANDAs count stood at 21 at the end of FY11. During this quarter Orchid has also received 1 tentative ANDA approval for Eszopiclone Tabs. The final ANDA approval is expected in due course on patent expiration. The break-up of the total final ANDAs approval count comprises of 11 in Cephalosporin space and 10 in the NPNC space.

European Union
In the EU region the cumulative count of Marketing Authorizations (MAs) filed stood at 25. The break-up of the total MA filings is 13 in the Cephalosporin space and 12 in the NPNC space. A few more dossiers have been lined up for filing during 2011, based on the DCP slots allotted by the respective RMS (Reference Member States) countries in the EU. This is likely to increase the cumulative filing count in the coming quarters.

In the EU region the cumulative count of Marketing Authorizations (MA) approved stands at 17. The break-up of the total MA approval count is 9 in the Cephalosporin space and 8 in the NPNC space.

API segment

In the API (Active Pharmaceutical Ingredients) space, Orchid's cumulative US DMFs filed stood at 81. The break-up of the total filings is 27 in the Cephalosporin space, 41 in NPNC space, 2 in the Betalactam segment and 11 in the Carbapenems segment.

The cumulative filings of COS (Certificate of Suitability) for the European market stood at 21 which includes 14 in Cephalosporin space, 6 in NPNC space and 1 in the Betalactam segment.
With staunch efforts on product development, Orchid’s filing and approval count is poised to increase in the coming months and quarters.

Click here for Audited Financial Results for the year ended March 31, 2011

Shri. K Raghavendra Rao - a brief profile
Mr. K Raghavendra Rao, Founder - Chairman & Managing Director of Chennai-based global pharmaceutical major, Orchid Chemicals & Pharmaceuticals Ltd., (Orchid) is a role model of first generation entrepreneurship. His life and career demonstrate how talented professionals can harness their entrepreneurial energy and utilize the huge opportunity offered by India to establish world-class businesses generating employment and earning valuable foreign exchange for the country.

Born in Chennai, in the year 1958, Mr Raghavendra Rao had been a brilliant student all through his career. He graduated with a Degree in Commerce from Andhra University with a gold medal for being the topper. He pursued post-graduate studies in Management in the prestigious Indian Institute of Management, Ahmedabad. He also acquired Costing (ICWAI) and Company Secretary (ACS) qualifications while in employment making him a highly qualified professional with multiple competencies.

Mr. Rao established Orchid in 1992 as a 100% export oriented unit (EOU) and grew the Company rapidly into a global pharmaceutical enterprise specializing in life saving medicines. With world-class research and manufacturing facilities covering Active Pharmaceutical Ingredients (APIs) and finished dosage forms as well as infrastructure for New Drug Discovery, Orchid today ranks amongst the top pharmaceutical companies in India.

By developing Orchid as the largest pharmaceutical corporation in the State of Tamil Nadu, Mr. Rao firmly placed Tamil Nadu in the national and international pharmaceutical canvas.

Mr. Raghavendra Rao is a recipient of several awards and recognitions for his personal and professional accomplishments and Orchid, for its business performance. Mr. Rao received prestigious national awards for his entrepreneurship, two of the leading awards being the India Young Business Achiever Award in 1997 and Ernst & Young Entrepreneur of the Year Award in Manufacturing in 1999. Orchid won several awards for its export performance, environmental friendly operations, energy efficiency and corporate social responsibility (CSR). Orchid Trust established with the initiative of Mr. Rao, contributed to significant social development through schools and healthcare facilities. Orchid's CSR initiatives were recognised by the Loyola Institute with the Mother Teresa Award for the Best Corporate Citizen in 2001. Mr. Rao was also conferred the Doctor of Letters (Honoris Causa) by the SASTRA University in 2007 for his entrepreneurial achievements and contribution to the growth of the Indian pharmaceutical industry.

Earnings (Consolidated) for the quarter ended December 31, 2010 (Q3 FY11)
Chennai-based global Pharma major Orchid Chemicals & Pharmaceuticals Ltd. (Orchid) achieved a consolidated turnover and operating income of Rs 478.5 crore for the quarter ended December 31, 2010 (Q3 FY10-11) in comparison to Rs 360.45 crore registered during the corresponding third quarter of last fiscal, representing a strong growth of 33%.
Earnings before Interest, Depreciation & Tax (EBITDA) grew by 78% to Rs 134.95 crore compared to Rs 75.90 crore during the corresponding quarter of last year.
Profit before Tax (PBT) rose by 542% to Rs 75.61 crore compared to loss of Rs 17.12 crore registered during the corresponding period of last fiscal.
The net profit (PAT) of the company grew strongly by 400% to Rs 56.62 crore compared to a loss of Rs 18.91 crore of the corresponding Q3 of the last fiscal.
EPS rose to Rs 8.04 for the period under review compared to a negative EPS of Rs 2.69 registered during the corresponding period of last fiscal.

Earnings (Consolidated) for the nine months ended December 31, 2010
Orchid's turnover and operating income for the nine months ended December 31, 2010 rose by 21% to Rs 1245.59 crore compared to Rs 1029.34 crore of the corresponding period of last fiscal.
Earnings before Interest, Depreciation & Tax (EBITDA) grew by 31% to Rs 296.32 crore compared to Rs 226.76 crore registered during the corresponding period of the previous fiscal.
During the period, the Profit before Tax (PBT) grew by 334% and stood at Rs 123.30 crore compared to loss of Rs 52.78 crore registered during the same period of last fiscal.
At the net (PAT) level, the company registered a strong profit of Rs 97.48 crore as compared to a loss of Rs 58.26 crore of the corresponding nine months of the last fiscal, registering a growth of 267%.
The EPS for the period stood at Rs 13.84 compared to a negative EPS of Rs 7.49 of the corresponding period of the last year.

PERFORMANCE OF KEY BUSINESS SEGMENTS

Global API business
During Q3 FY11, Orchid’s API (Active Pharmaceutical Ingredients) business gained traction and achieved a strong growth of 203%. The API division registered revenues of Rs 339.27 crore (US$ 75.90 million) as compared to Rs 111.8 crore (US$ 25.01 million), registered during the corresponding period of last fiscal.
The long-term exclusive API supply arrangements with Hospira and other majors have aided an increased API off take.

Global Generics business (Formulations)
Orchid's finished dosage forms business (both regulated and emerging markets) maintained a steady growth rate during the quarter under review. With a healthy product pipeline and anticipated regulatory approvals / registrations, the business will gain traction in the further quarters.
The formulations segment achieved a sale (global, including India) of Rs 91.85 crore (US$ 20.55 million) as compared to a sale of Rs 198.86 crore (US$ 44.49 million) achieved during the corresponding 3rd quarter of last fiscal.
Among the commercialized products in the Oral Cephalosporins segment, products like Cefdinir Capsules, Cephalexin Capsules and Oral suspension, Cefadroxil Capsules, Cefprozil Tablets and Oral suspension & Cefuroxime Axetil Tablets continued to show steady growth. The more recently launched products in the Non-Penicillin, Non-cephalosporin (NPNC) segment also continued to deliver steady sales.

REGULATORY UPDATE

API (Active Pharmaceutical Ingredient) segment
Orchid's cumulative filings of US DMFs stood at 81. The break-up of the total filings is 28 in the Cephalosporin space, 40 in NPNC space, 2 in the Betalactam segment and 11 in the Carbapenems segment.
The cumulative filings of COS (Certificate of Suitability) for the European market stood at 21 which includes 14 in Cephalosporin space, 6 in NPNC space and 1 in the Betalactam segment.

Finished Dosage Forms (Formulations) segment
Orchid's cumulative ANDA filings for the US market stands at 39 including the recently filed one for Aripiprazole ODT. This includes 8 Para IV FTF (First–To–File) filings. Out of this we have already settled with the Innovator companies for 4 products.
The break-up of the total ANDA filings is 13 in Cephalosporins space and 26 in NPNC (Non-penicillin, Non-cephalosporin) space.
In the EU region the cumulative count of Marketing Authorizations (MA) filings stood at 16. The break-up of the total MA filings is 10 in Cephalosporin space and 6 in the NPNC space. Few more dossiers have been lined up for filing during 2011, based on the DCP slots allotted by the respective RMS (Reference Member States) countries in the EU.
The final approved ANDAs count stood at 21 at the end of the 3rd quarter of FY 10-11. During this quarter, Orchid has also received 1 tentative ANDA approval for Rivastigmine Capsules. The final ANDA approval is expected in due course on patent expiration. The total final ANDA approval count comprises of 11 in Cephalosporin space and 10 in NPNC space.
In the EU region the cumulative count of Marketing Authorizations (MA) approval stands at 9. The break-up of the total MA approval count is 5 in the Oral Cephalosporin space and 4 in the Oral NPNC space.
Orchid's filing and approval count is poised to increase in the coming months and quarters.

From the Chairman & Managing Director
"Our business has arrived at a strong earnings platform that will see sustainable robust growth from here on. This is despite transferring our Injectable formulations business to Hospira. We have firmed up supply arrangements and have put in place a model that enables robust revenue growth with stable margins going forward. We are confident of registering strong double-digit growth coupled with more than proportionate profitability year-on-year going forward", said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

The award honors professionals who have been a role model for the profession by achieving success in the business enterprises that they have been involved with in the capacity of Chairman and Managing Director.

H1 earnings (for the half year ended September 30, 2010) - Standalone
Orchid's revenues for the half-year (H1) ended September 30, 2010 rose by 14% to Rs 712.72 crore compared to Rs 623.24 crore registered during the corresponding period of last fiscal. Earnings before Interest & Tax (EBIT) grew to Rs 100.76 crore compared to Rs 77.24 crore registered during the corresponding H1 of the last fiscal. Profit/(loss) after tax stood at Rs 45.63 crore as compared to a loss of Rs 42.96 crore of the corresponding half-year of last fiscal.

H1 earnings (for the half year ended September 30, 2010) - Consolidated
On a consolidated basis, Orchid’s revenues for the half-year (H1) ended September 30, 2010 rose by 15% to Rs 767.02 crore compared to Rs 668.41 crore registered during the corresponding period of last fiscal. Earnings before Interest, Depreciation & Tax (EBIDTA) stood at Rs 161.37 crore compared to Rs 151.10 crore registered during the corresponding H1 of the last fiscal. Profit after tax stood at Rs 40.86 crore as compared to a loss of Rs 40.49 crore of the corresponding half-year of last fiscal.

From the Managing Director
"The second quarter of this fiscal has witnessed strong growth which was primarily driven by the enhancement in supply of niche APIs to global generic majors. We are currently harvesting the benefits of several investments / strategies that we had embarked on earlier. We will continue to deliver robust performance in the quarters to come and create sustainable value for our stakeholders", said Mr K Raghavendra Rao, Chairman & Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Generics update
During the Q2 of this fiscal, Orchid’s regulated generics business continued to post robust earnings. The earlier launched products in both the Oral Cephalosporins segment and the Non-penicillin, Non-cephalosporin (NPNC) segment have maintained their market shares and market positions.

With several launches across varied spectrum of markets and product segments lined up in the coming quarters, Orchid’s revenues from the regulated generics business is poised to grow significantly going forward.

Regulatory update

Filling

API
In the API (Active Pharmaceutical Ingredients) space, Orchid increased its cumulative filings of its US DMFs to 83. The break-up of the total filings is 32 in the Cephalosporin space, 39 in NPNC space, 3 in the Betalactam segment and 9 in the Carbapenems segment.

The cumulative filings of COS (Certificate of Suitability) for the European market stood at 21 which includes 14 in Cephalosporin space, 6 in NPNC space and 1 in the Betalactam segment.

Finished Dosage Forms (FDF)
Orchid's cumulative ANDA filings for the US market stands at 38. This includes 8 Para IV FTF (First–To–File) filings. The break-up of the total ANDA filings is 13 in Cephalosporins space and 25 in NPNC space.

In the EU region the cumulative count of Marketing Authorizations filings stood at 16. The break-up of the total MA filings is 10 in Cephalosporin space and 6 in the NPNC space.

Approvals
During the second quarter, Orchid received the final ANDA approval for Levetiracetam Tabs 1000 mg. With this, the total count of ANDAs approved stand at 21. The break-up of the total ANDAs approved comprise 11 in the Cephalosporin space and 10 in NPNC space.

In the EU region, the cumulative count of Marketing Authorizations (MA) approved stand at 9. The break-up of the total MAs approved is 5 in the Cephalosporin space and 4 in the Oral NPNC space.

With a strong product pipeline under development, Orchid’s filing and approval count is poised to increase going forward.

Consolidated earnings for the first quarter ended June 30, 2010 (Q1)
On a consolidated basis, Orchid registered a turnover of Rs 364.57 crore for the quarter ended June 30, 2010 (Q1 FY11) in comparison to Rs 332.79 crore registered during the corresponding first quarter of last fiscal. Earnings before Interest, Depreciation and Tax (EBIDTA) stood at Rs 82.43 crore compared to Rs 64.97 crore registered during the corresponding quarter of last fiscal. Earnings before Interest and tax (EBIT) stood at Rs 54.01 crore compared to Rs 30.43 crore during the corresponding quarter of last year. At the net level, the Company registered a profit after tax (PAT) of Rs 23.53 crore after exceptional item (loss) of Rs 4.70 crore compared to a net loss of Rs 27.29 crore after exceptional item (loss) of Rs 3.64 crore for the Q1 of last fiscal.

From the Managing Director
“Orchid’s performance in Q1 FY11 reflects the start of a strategic and robust growth journey. We have put in place a three-pronged growth strategy comprising ramp-up of existing business verticals, front-end acquisitions and entry into new niche product segments to propel growth over the next 3 years. With a significantly de-leveraged balance sheet and a well-diversified product basket targeted at the regulated and emerging markets, we are confident of posting strong double-digit growth year-on-year going forward”, said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Regulated market business
Orchid started supplies of its Active Pharmaceutical Ingredients (APIs) to Hospira based on the contract entered into by both the companies as part of the Business Transfer. Steady ramp up in the API quantities based on the order book will augur well for Orchid going forward. During the first quarter of this fiscal, Orchid also received the US FDA nod for its Meropenem API DMF (based on the ANDA approval received by Hospira). Orchid is the only company to have received the approval for this product thus far. Based on this approval, Orchid began supply of Meropenem API to Hospira which is expected to ramp up further in the coming quarters. Orchid is also working on API supply arrangements to certain other MNCs / Innovators based on specific product-market contracts which will provide a strong revenue pattern going forward.

Orchid is also ramping up its Oral Formulations business in the regulated markets based on a strong product pipeline and launch calendar.

Regulatory update

API
In the API (Active Pharmaceutical Ingredients) segment, Orchid increased its cumulative filings of its US DMF count to 82. The break-up of the total filings is: 30 in the Cephalosporin Segment, 39 in NPNC segment, 2 in the Betalactam segment and 11 in the Carbapenems segment.

The cumulative filings of CoS (Certificate of Suitability) for the European market stood at 20 which includes 13 in Cephalosporin segment, 6 in NPNC segment and 1 in the Betalactam segment.

Formulations

Filings
Orchid’s cumulative ANDA filings for the US market stands at 36 including the recently filed ones for Rasagiline and Pantoprazole Tablets. This includes 8 Para IV FTF (First-To-File) filings. Out of this, we have already settled with the Innovator for 3 products. Desloratidine IR/ODT can be launched in Jan-12/Apr-12 respectively and Memantine Tablets in Jan-15. The break-up of the total ANDA filings is: 13 in Cephalosporins and 23 in NPNC. Few more ANDAs which are in the later stages of development are expected to be filed in the ensuing quarters.

In the EU space the cumulative count of Marketing Authorizations filings moved to 16. The break-up of the total MA filings is: 10 in Cephalosporin segment and 6 in the NPNC segment. A few more dossiers have been lined up for filing during 2010, based on the DCP slots allotted by the respective RMS (Reference Member States) countries in the EU. This is likely to increase the cumulative filing count significantly in the coming quarters.

Approvals
As of Q1 FY11, the cumulative ANDA (Abbreviated New Drug Application) approval count stands at 20. Of these, 11 correspond to the Cephalosporin segment and 9 to the NPNC segment. Orchid received the tentative ANDA approval for Modafinil Tablets and Gemifloxacin Mesylate Tablets. The final ANDA approvals for these products are expected in due course.

In the EU space the cumulative count of Marketing Authorizations approval stands at 9. The break-up of the total MA approvals is 5 in the Cephalosporin segment and 4 in the NPNC segment.

With a robust product development pipeline, Orchid’s filing and approval count is poised to increase in the coming months and quarters.

Distribution alliance with Alvogen
During the first quarter of FY11, Orchid entered into an out-licensing and distribution agreement with US-based pharma major Alvogen for marketing 8 of Orchid’s Oral non-antibiotic generic formulations in the US market. Under this agreement, Orchid will develop and manufacture 8 Oral non-antibiotic formulations for licensing to and marketing by Alvogen in the US. Alvogen will source these products from Orchid exclusively. Alvogen would pay certain dossier license fees to Orchid based on development and regulatory milestones and share profits arising from marketing of these products in the US with Orchid. Both the companies would share the legal expenses and bio-study costs.

Acquisition of Karalex Pharma, LLC
Orchid recently achieved a significant milestone in its operating journey by completing its first cross-border acquisition. Orchid acquired Karalex Pharma, LLC, a US-based generic marketing and sales services company headquartered in New Jersey, USA through an all-cash deal. Through this acquisition, Orchid has created its presence in the front-end US market and will be able to reach its generic products to the US customers directly.

This move also endows Orchid, for the first time, with a complete end-to-end coverage capability of the entire generic pharmaceutical business cycle from product development to product sales and would enable Orchid to internalize value.

Through this acquisition, Orchid has created its presence in the front-end US market and will be able to reach its generic products to the US customers directly.

Karalex Pharma is a leading provider of generic pharmaceuticals focused exclusively on the US healthcare market. Karalex Pharma LLC., was launched in 2007 as a Pharmaceutical company committed to becoming a leading provider of marketing and sales services to US classes of trade for developers and manufacturers of generic Pharmaceuticals.

Karalex Pharma was founded by Mr Nick DiMaio and Ms Julie Trendowicz who have a collective experience in the generic pharmaceutical sales and marketing field of over 50 years. They have launched over 100 generic pharmaceutical products in the US with a combined value in excess of US$ 1 billion.

"We are happy that we have established our presence in the generic sales and marketing area with this acquisition. This acquisition will provide a strong commercial US-based sales capability to Orchid, paving the way for synergistic returns from our upcoming and long-term strategic generic pharmaceuticals pipeline comprising key first-to-file and Paragraph-IV products. This move also endows Orchid, for the first time, with a complete end-to-end coverage capability of the entire generic pharmaceutical business cycle from product development to product sales and would enable Orchid to internalize value", said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

The Chennai-based pharma major, Orchid Chemicals & Pharmaceuticals Ltd (Orchid) registered a turnover and operating income of Rs 1251.04 crore for the fiscal year ended March 31, 2010 compared to the previous year’s revenues of Rs 1211.27 crore.

At the net level, Orchid registered a profit after tax of Rs 331.34 crore as against a loss after tax of Rs 52.17 crore registered during the last fiscal.

Consolidated earnings for the fiscal ended March 31, 2010

On a Consolidated basis, Orchid’s turnover rose to Rs 1343.45 crore for the fiscal ended March 31, 2010 compared to Rs 1315.56 crore of the corresponding fiscal.

The company registered a profit of Rs 339.25 crore at the net level for the fiscal ended March 2010 compared to a loss of Rs 48.99 crore of the corresponding fiscal.

Orchid’s board that met today to adopt the audited financial results for the fiscal ended March 31, 2010 recommended a dividend of 100%.

Quote from the Managing Director

“The fiscal year 2009-10 witnessed many positives which will in turn help in driving the business to a higher plan going forward. The transfer of our injectables business to Hospira was completed successfully and we were able to significantly bring down our debt levels with the sale proceeds. Although the performance of the company at the EBIDTA level has been dented because of one time write-offs, we are happy that we have surpassed these issues and the future growth trajectory is strongly intact. We have embarked on a robust strategy of powering our future growth through a combination of organic and inorganic initiatives and we are confident that we would achieve a significant increase in our sales and profitability during the current fiscal,” said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Business Transfer transaction with Hospira

During the 4th quarter of the fiscal under review, Orchid completed the transaction for sale and transfer of its generic injectable finished dosage forms pharmaceuticals business to Hospira. The sale and transfer transaction included Orchid’s betalactam antibiotics injectables manufacturing complex and formulations R&D facility at Irungattukottai, Chennai as well as its generic injectable product portfolio and pipeline. The human resource base related to the transferred business also moved to the new entity.

Orchid repaid Rs 1400 crore of loans during the 4th quarter of FY10. Consequently, Orchid’s balance sheet has been significantly de-leveraged.

Regulatory update

Formulations

United States

Orchid’s cumulative ANDA filings for the US market stands at 35. This includes 8 Para IV FTF (First–To–File) filings. Of the 8 FTFs filed, Orchid has settled with the Innovator for 3 products. The break-up of the total ANDA filings is: 13 in Cephalosporins and 22 in the NPNC (non penicillin, non cephalosporin) segment. Orchid would be increasing the pace of its ANDA filings rapidly going forward.

The final ANDA approval count remained at 20 at the end of the 4th quarter of FY 09-10. Orchid received 2 more tentative ANDA approvals during the 4th quarter of FY10 for Ibandronate Sodium Tablets 150 mg and Memantine Hydrochloride Tablets 5mg and 10mg. These are Para IV FTF (First-to-file) opportunities. Orchid also received a tentative approval during the 1st quarter of FY 10-11 for Modafinil Tabs 100 mg and 200 mg. The final ANDA approvals for these products are expected during the current fiscal. The break-up of the total final ANDA approval count comprises 11 in the Cephalosporins segment and 9 in NPNC (non penicillin, non cephalosporin) segment.

EU

In the EU market the cumulative count of Marketing Authorizations (MA) filed by Orchid stands at 12. The break-up of the MA filings is: 7 in the Cephalosporin segment and 5 in the NPNC segment. Orchid has also filed 75 dossier filings through its marketing partners and customers. During the 4th Quarter of FY09-10, Orchid filed 7 Marketing Authorizations out of which 6 were made through its marketing partners.

In the EU space the cumulative count of Marketing Authorizations approval stands at 8. The recent approvals include Cefixime Tablets and Modafinil Tablets. The break-up of the total MA approval count is: 4 in the Cephalosporin segment and 4 in the NPNC segment. Orchid has also received 22 approvals for the dossiers filed through its marketing partners and customers in the EU region. A total of 5 Marketing Authorizations approvals were received in the Q4 of FY 09-10 out of which 2 approvals were for filings made through the marketing partners.

API segment

In the API (Active Pharmaceutical Ingredients) segment, Orchid increased its cumulative filings of its US DMF count to 73. The break-up of the total filings is: 28 in the Cephalosporin Segment, 34 in NPNC segment, 2 in the Betalactam segment and 9 in the Carbapenems segment.

The cumulative filings of COS (Certificate of Suitability) for the European market stood at 20 which includes 13 in Cephalosporin segment, 6 in NPNC segment and 1 in the Betalactam segment.

With a robust product development pipeline, Orchid’s filing and approval count is poised to increase rapidly in the coming quarters.

Under this agreement, Orchid will develop and manufacture 8 Oral non-antibiotic formulations for licensing to and marketing by Alvogen in the US. Alvogen will source these products from Orchid exclusively. The products will be manufactured at Orchid’s state-of-the-art Oral API and dosage form facilities, which are approved by the USFDA. Alvogen would pay certain dossier license fees to Orchid based on development and regulatory milestones and share profits arising from marketing of these products in the US with Orchid. Both the companies would share the legal expenses and bio-study costs.

These 8 non-antibiotic oral formulations licensed to Alvogen under the agreement comprise products in the high-growth therapeutic segments of CNS and Osteoporosis among others. The combined addressable market size of these 8 products is around USD 8 billion.

Orchid and Alvogen believe that the combination of their respective development, manufacturing and regulatory and marketing competencies would result in achieving a strong position for all the products in the US market.

“Orchid has created a strong base in the US generics market through its antibiotic and non-antibiotic product portfolio. Our growth in the US generics market, since our entry in 2005 has been very robust and this has been possible because of our high value niche product line and the marketing alliance model that we embarked on. Moving forward, we are progressing on further leveraging on our non-antibiotic product portfolio. Through the alliance that we have entered into with Alvogen, we are confident of achieving robust additions to our business from the US non-antibiotic generic formulations segment”, said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

Pursuant to this settlement, Orchid would be free to commercially launch this product in January, 2015, or earlier in certain circumstances.

Orchid had in 2007 filed a Paragraph-IV certification, contesting that the patent was invalid or had not been infringed, resulting in the subsequent litigation with Forest. Additional terms of the settlement are confidential, and the agreement is subject to review by the Department of Justice and the Federal Trade Commission.

Namenda (Memantine) recorded sales of approximately USD 950 million during the year 2009 in the USA.

The sale and transfer transaction includes Orchid’s betalactam antibiotics injectables manufacturing complex and formulations R&D facility at Irungattukottai, Chennai as well as its generic injectable product portfolio and pipeline. The human resource base related to the transferred business also moves to the new entity.

Mr K Raghavendra Rao, Managing Director, Orchid stated, “the completion of the transaction enables Orchid de-lever the balance sheet and achieve financial flexibility to pursue new growth opportunities. In addition, through the strategic supply arrangement with Hospira, Orchid would be ensuring long term contractual API revenue streams. Orchid is engaged in creation of a roadmap to further expand business opportunities”. Mr K R Rao also announced that Dr C B Rao who has been associated with Orchid from the inception as a member of the Board and Deputy Managing Director will be joining Hospira India as its Managing Director, providing continuity of leadership with the team joining Hospira.

Hospira and Orchid are committed to supporting the various alliances and distribution arrangements of the acquired business.

Standalone earnings

Chennai-based pharma major Orchid Chemicals & Pharmaceuticals Ltd. (Orchid) achieved a turnover and operating income of Rs 332.60 crore for the quarter ended December 31, 2009 (Q3 FY09-10) in comparison to Rs 310.21 crore registered during the corresponding third quarter of last fiscal.

Earnings before Interest & Tax (EBIT) stood at Rs 34.72 crore compared to Rs 66.10 crore during the corresponding quarter of last year.

Loss before tax (prior to exceptional item of Rs 3.81 crore on account of exchange gain on the FCCBs) was Rs 18.88 crore as against Rs 28.13 crore (prior to exceptional item of Rs 31.15 crore on account of exchange loss on the FCCBs) of the corresponding third quarter of the last fiscal. After considering the exceptional item on account of exchange gain on the FCCBs, there was a loss before tax of Rs 15.06 crore in Q3 of this fiscal compared to a loss of Rs 3.02 crore during the corresponding Q3 of the last fiscal.

At the net level, the company registered a loss of Rs 16.86 crore (which included the exceptional item gain of Rs 3.81 crore) compared to a loss of Rs 6.31 crore (which included the exceptional item loss of Rs 31.15 crore) of the corresponding Q3 of the last fiscal. EPS was negative at Rs 2.39 compared to a negative EPS of Rs 0.92 of the corresponding period of last fiscal.

Earnings for the nine months ended December 31, 2009

Standalone earnings

Orchid’s turnover and operating income for the nine months ended December 31, 2009 stood at Rs 955.85 crore as compared to Rs 964.98 crore of the corresponding period of last fiscal. Earnings before Interest & Tax (EBIT) stood at Rs 111.96 crore compared to Rs 190.49 crore registered during the corresponding period of the previous year.

A notional loss on FCCBs on account of the depreciation in the value of Rupee vis-à-vis Dollar resulted in the loss before tax (prior to exceptional item on account of exchange loss on the FCCBs) of Rs 49.92 crore as against a profit before tax of Rs 91.04 crore of the corresponding nine months of the last fiscal. After considering the exceptional item on account of exchange loss on the FCCBs, for the nine months ended December 31, 2009 the company registered a loss of Rs 54.35 crore compared to a loss of Rs 80.49 crore registered during the corresponding nine months of the last fiscal.

At the net (PAT) level, the company registered a loss (due to the loss on the exceptional item of Rs 4.43 crore) of Rs 59.82 crore compared to a loss of Rs 78.62 crore (which included the exceptional item loss of Rs 171.52 crore) of the corresponding nine months of the last fiscal. EPS for the period was negative at Rs 8.49 compared to a negative EPS of Rs 11.46 of the corresponding period of last year.

Quote from the Managing Director

“Orchid’s overall business canvas witnessed a stronger product penetration with the launch of the high-value Piperacillin-Tazobactam product in the US market. With a 6-month marketing exclusivity, we hope to achieve a significant revenue base in the US market upto March 2010. The product would also have a positive impact on the profitability of the company. We have also inked a Business Transfer Agreement with the global injectables company, Hospira whereby we would transfer our Injectable dosage form product development and manufacturing infrastructure and the product pipeline to Hospira for a total cash consideration of USD 400 million. This cash-infusion for Orchid, upon the close of the transaction will help significantly de-lever our balance sheet and give us the financial flexibility to pursue future growth opportunities”, said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd.

API Business

For the 3rd quarter ended December 31, 2009, the API business of Orchid registered a sale of Rs 111.80 crore compared to Rs 119.23 crore of the corresponding period of last fiscal. The company’s increasing focus on formulations led to a larger share of the API production being integrated with the manufacture and sale of formulations for various markets, particularly led by the regulated markets.

Formulations Business

Regulated Generics

The 3rd quarter of this fiscal saw Orchid’s regulated formulation generics business achieve a strong position with Piperacillin-Tazobactam leading the product thrust. The other earlier launched products both in the antibiotic and non-antibiotic range continued to post stable sales.

Emerging markets

The Emerging markets (including India) business of Orchid continued to post good growth. This segment registered a turnover of Rs 40.02 crore during the quarter under review.

Regulatory update (Filings & Approvals)

Orchid continued to enhance its regulatory pipeline by filings as well as approvals of various regulatory dossiers, including Abbreviated New Drug Applications (ANDAs) and Marketing Authorisation Applications (MAA’s).

Filings - API

In the API (Active Pharmaceutical Ingredients) segment, Orchid increased its cumulative US DMF count to 76. The break-up of the total filings is: 28 in the Cephalosporin Segment, 35 in the NPNC segment, 2 in the Betalactam segment and 11 in the Carbapenems segment. In the European market space the cumulative count COS (Certificate of Suitability) filings remained at 21 which includes 13 in the Cephalosporin segment, 7 in the NPNC segment and 1 in the Betalactam segment.

In the EU space, the cumulative count of filings of Marketing Authorizations (MA’s) has been 23. The break-up of the total MA filings is: 16 in the Cephalosporin segment, 1 in the Betalactam segment, 4 in the NPNC segment and 2 in the Carbapenems segment. We also have 74 dossier filings that were made through our marketing partners and customers. A few more dossiers are expected to be approved in Q4 of this fiscal, based on the DCP closure by the respective RMS (Reference Member States) countries in the EU.

Filings – Formulations

Orchid’s cumulative ANDA filings for the US market has been at 58. This includes 7 Para IV FTF (First–To–File) filings. The break-up of the total ANDA filings is: 29 in Cephalosporins, 5 in Betalactams, 21 in NPNC and 3 in Penems. Few more ANDAs which are in the advanced stages of development are expected to be filed in ensuing quarters.

Approvals

US

Orchid recently received 2 more tentative ANDA approvals during the current quarter for Ibandronate Sodium Tablets 150 mg and Memantine Hydrochloride Tablets 5mg and 10 mg, taking the cumulative ANDA approval count to 39. The final ANDA approvals are expected in due course. These are Para IV FTF (First-to-file) opportunities. The break-up of the ANDA approval count comprises 26 in the Cephalosporin segment, 2 in the Betalactam segment and 8 in the NPNC segment.

Canada

In the Canadian market the cumulative count of ANDS (Abbreviated New Drug Submission) approvals has been 5, 4 of which are in the Cephalosporin Segment and 1 in the Beta-lactam segment. In the ANZ market the cumulative count of approval remained at 1, which is from the beta-lactam segment.

EU

In the EU market, the cumulative count of Marketing Authorizations (MA’s) approved moved to 12. The break-up of the total MA approval count is: 8 in the Cephalosporin segment, 1 in the Betalactam segment and 3 in the NPNC segment.

Orchid also has another 32 approvals for MAs filed through the marketing partners and customers in the region.

A few more dossiers are expected be approved in the current quarter of this fiscal, based on the DCP closure by the respective RMS (Reference Member States) countries in the EU.

Business Transfer Agreement with Hospira

Orchid entered into a Business Transfer Agreement on December 15, 2009 with Hospira, Inc. for transfer and sale of Orchid’s sterile generic injectable dosage forms business to Hospira for a cash consideration of USD 400 million.

The business to be acquired by Hospira includes Orchid’s sterile betalactam antibiotics manufacturing complex (comprising injectable cephalosporin, penicillin and carbapenem dosage form facilities) and formulations research and development facility, all located at Irungattukottai (Chennai), India as well as its generic injectable product portfolio and pipeline. The employees dedicated to this business will also move to the new entity.

Orchid has also inked a long-term exclusive agreement for Hospira to exclusively source from Orchid the active pharmaceutical ingredients (APIs) for the acquired generic injectable pharmaceuticals business.
The transaction has been unanimously approved by Hospira's and Orchid's boards of directors. It is subject to Orchid's shareholders and regulatory approvals and other customary closing conditions. The transaction is expected to be completed in the fourth quarter of FY10.

The proposed transaction will help Orchid considerably de-lever its balance sheet and have the financial flexibility to explore new growth opportunities.

Memantine is prescribed for the treatment of Alzheimer's disease. Orchid filed its ANDA for this product under the Paragraph IV, First-to-file (FTF) certification. The product is under patent litigation between Orchid and Forest.

According to IMS, the market for Memantine tablets is around US$ 1.1 billion.