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Orchid Chem embarks on a major revamp -- McKinsey recommends detailed strategy

C.R. Sukumar

HYDERABAD, July 10

ORCHID Chemicals & Pharmaceuticals Ltd (OCPL), the Rs 372-crore pharma company with core competencies in cephalosporins, has embarked upon a major restructuring programme following the recommendations of McKinsey & Company, the leading international mana gement consultants.

The scheme is aimed at turning Orchid into a composite pharma major competing in differentiated arenas from the current status of core competencies in cephalosporins. The new business plan envisages growth in multiple horizons which reflect the company's core competencies, the emerging business and also the embryonic business.

According to Orchid sources: ``The company has decided to realign its businesses and organisation structures into three strategic business units - bulk actives, formulations and research.''

The specific strategic actions include product-market diversification in bulk actives, business expansion in formulations and innovation-based ventures such as advanced chemical research, drug discovery and biotechnology, sources told Business Line.

Apart from chalking out a plan to expand bulk actives offtake in non-regulated markets, the company is considering entry into regulated markets of the US and Europe as key success factor for bulk actives business.

The company plans to present two of its cephalosporin bulk actives manufactured at its Alathur facility, near Chennai, for US-FDA approvals during the current fiscal year, thereby paving way for eventual US market entry.

Aimed at preparing more products for the regulated markets in the long-term, Orchid plans new oral and sterile manufacturing facilities to be build to US-FDA standards under the new investment programme.

Based on its strengths in anti-infective markets, Orchid also proposes to supplement its range with select anti-retrovirals to join the league of pharma majors fighting against AIDS. Stating that the first product in the AIDS therapy range was expected t o launched during the second quarter of current fiscal, sources said the company would build flexibility to pursue a broader range of drugs in anti-HIV treatment.

As the core strategy to aggressively explore export markets, Orchid proposes to set up manufacturing plants for formulations to the US-FDA and UK-MCA standards.

It is currently in the process of setting up three plants at Irungattukottai, near Chennai, for the manufacture of oral and sterile cephalosporin formulations and oral non-cephalosporin formulations. The engineering design work of these plants was assign ed to Bovis Lend Lease, the UK-based pharma engineering consultancy major.

According to sources, the company's research initiatives would focus on advanced chemical research, drug discovery and delivery systems and bio-enzymes as well as other products of biotechnology. Orchid is currently setting up its second R&D centre for s upporting new drug discovery and novel drug delivery systems research which includes medicinal chemistry, molecular modelling, combinatorial chemistry, drug screening, pharmacology, toxicology, molecular biology and bioinformatics.

Stating that a new laboratory for biotransformations was also being set up to support the research in bio-enzymes, sources said: ``This will be the first definitive move for Orchid in the area of biotechnology. The company is also evaluating plans for ot her biotechnology and biopharmaceutical products.''

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