How Orchid Pharma is doing under the new management
Dhanuka Laboratories, the new promoters of Orchid Pharma after it formally took control of the company on 31 March 2020 following the corporate insolvency resolution process (CIRP), has divested 8.04% holdings in latter to keep up with the minimum 10% public shareholding norms of the Securities and Exchange Board of India (Sebi).
Dhanuka Laboratories has sold 32,80,115 shares of Rs 10 each to retail and non-retail investors to take the public shareholding to 10.04%. Dhanuka Laboratories now holds 89.96% in Orchid Pharma, which it acquired through a CIRP process after the National Company Law Tribunal (NCLT) on 27 June 2019 and later upheld by the Supreme Court through its order on 28 February 2020.
Sebi regulations require every listed company shall maintain public shareholding of at least five per cent as a result of implementation of the resolution plan approved under section 31 of the Insolvency and Bankruptcy Code, 2016. The company is further required to attain 10% public shareholding within two years and 25% shareholding within five years of relisting.
The Board of Directors of Orchid Pharma was reconstituted with nominees of Dhanuka Laboratories Limited and powers of the Board was reinstated in the company with effect from 31 March 2020.
Dhanuka Laboratories paid Rs 1060 crore to emerge successful resolution applicant for Orchid Pharma, which owed Rs 3,643 crore to creditors.
FY’21 financial performance
Orchid Pharma reported Rs 455 crore revenue in 2020-21 on a consolidated bases, down 9% from previous year. The net loss also increased almost 50% to Rs 95 crore during the year compered to Rs 65 crore in the previous year.
The company was hit by drastic decrease in patient volume in standalone clinics and hospitals 19 and a significant demand reduction of antibiotics due to Covid-19. According to the company, tit saw a 20% reduction in demand in 2020-21 vis-Ã -vis in 2019-20.
The fourth quarter result for the company, however, shows some hope as it managed to bring down the loss to Rs 6 crore from Rs 45 crore in the December quarter. The net loss reported in the fourth quarter of the previous financial year was 54 crore.
Another positive for the company is that its EBIDTA has increased from Rs 9.5 crore in 2019-20 to Rs 64 crore in 2020-21.
Future Strategies
According to an investor presentation, Orchid Pharma lost total business of around Rs 200 crores, 40-50% of which it plans to capture in next 2- 3 years.
It plans to bring down the total debt in the company to below Rs 100 crore by March 2022. At the end of March 2021, the company’s total borrowings are around Rs 225 crore. It plans to hive off its NPNC FDF business to a JV with Bion, a $100mn US Generics player.
The company management now plans to develop new products, which are already off patent, but not in Orchid’s basket. For that it wants to leverage Dhanuka’s technology and capability to launch in regulated markets.
The company also plans to focus on first to file after Patent expiry in USA and China. The company estimates a market size of $200 million for these products. It is targeting a market share of be 5-10%.
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