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Title: CONFIDENTIAL


1
CONFIDENTIAL
A presentation on
November 8, 2004
2
Disclaimer
  • This presentation includes forward-looking
    statements / projections, which are based on
    current expectations and forecast about future
    events. Such statements involve known / unknown
    risks uncertainties and other factors and may
    cause and defer the actual results materially.
    Such factors include, but are not limited to,
    changes in local and global economic conditions,
    the Companys ability to successfully implement
    strategies, the market acceptance and demand of
    the Companys products and services, the
    Companys growth rates, expansion, technological
    change and the Companys exposure to market risks
  • By this nature, these indications and projections
    are only estimates and actual results could
    differ from these in the future.

3
Contents
Pharmaceutical Industry Orchid - An
introduction Initiatives Undertaken Business
Model Generics Financials Growth Drivers
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4
Pharmaceutical Industry
5
Global Pharmaceutical Industry
  • Size of global pharmaceutical industry is
    estimated to be USD 467 billion (2003) and is
    expected to grow significantly by 2005
  • Industry growth rate 7 to 9 during the last
    five years.
  • North America is the largest and the fastest
    growing market in the world (USD 229.5 billion in
    size and has grown by 12.7 during 2003)

Source IMS Global Health
6
Global Anti-infectives Market
  • Global anti-infectives constitute a large market
    in terms of both revenue and prescription volume
    - USD 30 bio in 2002
  • The anti-infectives market is poised to grow to
    USD 38 billion by 2006 at a CAGR of 3-5
  • Cephalosporins and combinations represent the
    largest segment (USD 9.65 billion) of the
    anti-infectives market
  • Cephalosporins are effective against both gram
    positive and gram negative bacteria with a wide
    spectrum of activity
  • There are over 60 Cephalosporins, spanning first
    to fourth generation, with diversified
    therapeutic activity newer cephalosporins are
    under pre-clinical and clinical trials.

7
The overall global cephalosporin retail market
Regulated markets constitute 66 of the retail
cephalosporin market, which offers a major
opportunity for us
8
Trends in Global Pharmaceutical Industry
  • Growing importance of generics
  • Generics will be a fast-growing segment in
    regulated markets
  • With USD 10 billion (retail) worth of drugs going
    off-patent each year on average, generics
    represent a major opportunity for India
  • High quality, cost-competitive API and
    formulations are vital for growth of generics
    industry
  • Managed healthcare driving down healthcare costs,
    boosting generics
  • Increasing need for new drug pipeline
  • Big pharma companies under great pressure to
    enhance NCE pipeline
  • Focus on extending patent life through novel drug
    delivery systems and therapeutic switch
  • Major potential to select Indian firms to support
    drug discovery
  • Consequent structural changes
  • Generics outsourcing
  • RD outsourcing

9
Indian Pharmaceutical Industry
  • The Indian pharmaceutical industry is USD 7.5
    billion in size (Domestic - USD 4.5 billion and
    Exports - USD 3 billion)
  • The Indian pharmaceutical industry is led by
    Indian companies known for their chemistry skills
    and companies with domestic brand equity
  • The patent regime enabled Indian pharma players
    achieve dominance in new product introductions
    utilising the chemistry skills
  • With the impending introduction of product patent
    regime, select Indian pharma players are now
    positioning themselves in regulated generics and
    drug discovery space
  • Orchid has emerged as a front-runner in the
    Indian pharma industry in a short span of 10
    years.

10
Orchid - An introduction
11
Orchid
Is a first generation enterprise which has carved
out for itself a niche in global anti-infectives
markets in a short span of time and... Is
evolving rapidly into a composite pharmaceutical
major with presence in bulk drugs, formulations
and drug discovery
12
Orchid - An Introduction
  • Orchid was incorporated in 1992 as a 100 Export
    Oriented Unit (EOU)
  • Promoted by Mr. K Raghavendra Rao, (Founder- MD)
    a first generation entrepreneur with hands-on
    experience in conceptualising and commercialising
    large pharmaceutical and other projects.
  • Commenced operations in February 1994 with
    manufacture of bulk cephalosporins (Cephs) range
    of antibiotics from its manufacturing facility at
    Alathur, near Chennai, Tamil Nadu.
  • Evolved rapidly into an integrated life sciences
    company with a strong presence in
  • Active Pharmaceutical Ingredients (APIs)
  • Formulations
  • New Drug Discovery (NDD)
  • Novel Drug Delivery Systems (NDDS)
  • Company employs 3000 people across plants,
    research centre, field and offices.
  • Revenues of USD 160 million (2003-04)

API facilities at Alathur and Aurangabad
Formulations facilities at Alathur and
Irungattukottai RD Centre at Sholinganallur
Joint ventures in China, US and Europe
13
Orchid - Performance Profile (1/2)
In a short span, Orchids quantitative sales have
crossed 1000 MT, with a 15 share in global
cephalosporins market.
14
Orchid - Performance Profile (2/2)
Despite declining international bulk drug prices
in recent years, Orchids sales have touched USD
160 Mn - Orchid continues to be one of the
fastest growing pharmaceutical companies in
India.
15
Orchid - The Board and Key Management Persons
  • Maintains high standards of corporate governance
  • Fully compliant with all guidelines on corporate
    governance
  • On US GAAP for the last 5 years, with audit by
    Deloitte, one of the Big 4 Accounting firms.

One of the robust organisations in Indian pharma
today, with high calibre professionals having
proven track record
16
Orchid - Capital Structure
FCCB subscribed in May 2001, converted in
November 2002
Shares listed on NSE, BSE and MSE
As of 31/10/2004
17
Orchid - An established name in the Indian
pharmaceutical industry
  • USD 160 million, Chennai-based pharma major in
    India
  • Leader in the global cephalosporins segment
  • Largest manufacturer-exporter of Ceph APIs in
    India
  • Among the Top Five Ceph manufacturers in the
    world
  • Fifth largest exporter of pharmaceutical products
    in India
  • Ranks among the Top 10 Indian pharma companies
    and Top 11 pharma companies (Indian and MNC) in
    terms of Sales

18
Orchids ranking in Indian Pharma
19
(No Transcript)
20
Orchid - Regulatory Approvals / Certifications
  • Facilities / products approved by international
    regulatory authorities
  • Approval received from US FDA for Cephalexin API
    and Cefazolin sterile API - more
    inspections / approvals in the pipeline
  • Certificates of Suitability (CoS) from EDQM for
    select products (9 approvals received so far)
  • Approval from Australian TGA for entire range of
    Cephs (APIs) and Nutraceuticals (APIs and
    Formulations)
  • A quality oriented Company, committed to safety,
    health and environment
  • Certifications ISO 9001 2000
  • ISO 14001
  • ISO 14001 and OHSAS 18001 for Aurangabad
  • Orchid pioneered "zero discharge" pharmaceutical
    manufacturing in India Invested over Rs. 500
    million in effluent treatment plant at Alathur.
  • Orchid has been awarded the Confederation of
    Indian Industry Leadership Excellence Award in
    Safety, Health, Environment Manufacturing
    Award during 2002 and several other national
    international accolades
  • Orchid is a national show-case in environmental
    friendliness

21
A skilled employee base supports competencies
across all locations
22
Orchids web of six core capabilities
Quality leadership
Cost advantage
  • ISO 90012000 certified
  • cGMP approved
  • EDQM / CoS
  • US FDA certified
  • TGA approved
  • 30-40 lower manufacturing cost than
    global pharmaceutical corporations

Environmental showcase
Manufacturing prowess
  • World-class Lyophillization and Crystallization
    plants
  • Highly automated, flexible manufacturing
    capabilities
  • Expertise in handling complex and hazardous
    reactions
  • New plant for non-cephs
  • World-class finished dosage form facilities
  • Indias first and only Zero Discharge, ISO
    14001 certified facility
  • ETP investment over Rs 500 million
  • Recognized as the Gold Standard in environmental
    consciousness by the Government of India

Orchid is emerging as a preferred supplier to
global pharmacos which recognize Orchids quality
leadership, cost advantage and management
strengths
World class talent
RD strengths
  • Non-infringing novel routes of synthesis
  • New Chemical Entities
  • Novel drug delivery systems
  • Alternative processes to improve yields and
    reduce effluents
  • Large basket of patents and IP
  • Pipeline of DMFs and ANDAs
  • Innovative, entrepreneurial, collaborative
    senior management team
  • Over 250 highly qualified professionals with
    advanced degrees in science, engineering and
    management (including PhD/MS/MTech/MBA)

23
Initiatives Undertaken
24
Orchids strategy in 1999 aimed at expansion and
modernization of facilities
  • Cephalosporin infrastructure at Alathur upgraded
    and balanced to requirements
  • A bulk drugs unit in Aurangabad has been acquired
    and upgraded for high-end non-cephalosporin
    betalactams
  • RD strengthened with state-of-the-art NMR, LCMS
    and GCMS equipment
  • SAMe bulk nutraceutical facility set up in
    Alathur for US dietary supplement market
  • Nutraceutical formulations facility set-up to
    value add for US dietary supplement market
  • Loans drawn down selectively to reduce interest
    burden

25
Recognizing the changing market dynamics, Orchid
recast its plans in 2001 to focus on regulated
markets, formulations and drug discovery
Pre-2001
Post-2001 (Additional to Pre-2001)
26
The investment strategy was based on a sound
business strategy drawn up with McKinsey
The strategy is to grow the business in multiple
horizons comprising core, emerging and
knowledge-intensive businesses
In each of the Horizons, Orchid has taken
specific growth initiatives, both organic and
inorganic under a USD 100 million investment plan
which integrated Schroders and IFC investments,
internal generation and borrowings
27
Orchid - Initiatives Undertaken
Integrating the earlier Schroders / IFC
investment, the capital investment plan was...
28
Newly commissioned facilities
Generics facility
Sterile API plant
Orchid Towers
Non-sterile API plant
Intermediates plant
29
Orchid - Organic and inorganic growth
Horizon 3
NDD NDDS research Biotech Research
Horizon 2
Generics (US) Formulations
Horizon 1
Bulk - Unregulated Bulk - Regulated
30
Orchid - Investment Philosophy
  • Orchids investment philosophy has been for the
    long term
  • Invested in high-technology, high-quality assets
    from inception. Though investment intensive, this
    has positioned the Company ahead in its regulated
    market initiatives.
  • The Company undertook a strategic transformation
    into a composite pharmaceutical major, focused on
    US generics and drug discovery, entailing
    relatively long gestation periods.
  • The Company has also invested in research
    oriented Joint Ventures, which have a large
    upside potential
  • The above resulted in relatively high leverage,
    reduced net margins and lower sales to asset
    ratio. Yet, the company has high operating
    margins - Over 21.65 at the EBIDTA levels -
    Comparing favorably with the industry. Lower
    margins at net level have been more due to the
    impact of depreciation and interest. Cash
    profit-wise, Orchid is comparable with its peers
    in the industry.
  • The company has now world-class infrastructure in
    compliance with global regulatory requirements.
    The completed projects provide a launch pad for
    growth.
  • The Company is confident that with its
    world-class infrastructure in place, it is poised
    for high growth and profitability, which will
    lead to the following
  • High margins
  • Low Leverage
  • Good sales to asset ratio

31
Business Model
32
Orchids Business Model
  • Orchid business covers (domestic exports)
  • API
  • Formulations
  • Orchid has strong growth drivers
  • US Generics (Cephs and high-end betalactum
    molecules)
  • New Drug Discovery (NDD)
  • Novel Drug Delivery Systems (NDDS)
  • The business model of Orchid is anchored on
  • Consolidating and growing non-regulated API
    business
  • Penetrating European US markets with API
  • Exploiting the global generics markets
    (particularly US)
  • Expanding formulations business in emerging
    markets and domestic market with high potential
    molecules in chronic therapy segments
  • Development of new chemical entities and novel
    drug delivery systems

33
Orchids product-market grid
Arrangements for injectables with Apotex for US
and Canada and with Par Pharma for Orals in US
Varied alliances for other markets
US Europe Australia New Zealand Canada
Varied marketing arrangements for APIs
US Europe Japan
Regulated markets
China Africa Latin America Russia CIS Asia
Far East
Africa ME Latin America Russia CIS Asia Far
East
Non-regulated markets
JV in China will be a major growth driver
Russia and Brazil will be major markets
API Formulations
Presently 17.8 of sales come from regulated
markets expected to go up sharply in the years
to come
34
Orchids API infrastructure
Active Pharmaceutical Ingredients - APIs
API facility, Aurangabad near Mumbai
API facility, Alathur near Chennai
US FDA approval for Cephalexin and Cefazolin
35
The Ceph API market
  • Orchids core competence in cephalosporins offers
    major opportunity in worldwide API as well as
    regulated generics markets
  • Cephs are the largest and the fastest growing
    range of antibiotics (around 30 of the
    antibiotics segment)
  • Globally Cephs recorded sales of USD 10 billion
    during 2002 (Global tonnage- Approx 7000 MTPA)
  • In realisation terms growth of 5 pa.
  • In volume terms growth rate will be closer to 10
    pa.
  • Pen G based Cephs constitute around 26 and
    Ceph-C based Cephs constitute around 74
  • China continues to be the largest market for
    Cephs. Chinese market is expected to grow at
    over 14 pa.
  • Ceph molecules coming off patent in the next few
    years offer a breakthrough opportunity for Orchid
    in US and Europe

Orchid is present in all these product segments.
besides other molecules
36
Orchids core competencies in API business
  • A large API revenue base of Rs. 5708.7 mio (USD
    127 mio) for 2003-04, poised to grow further
  • An entire basket of Cephs and high-end
    betalactums to offer (spanning first to fourth
    generations) literally a one stop shop for the
    above products.
  • Non-infringing processes (NIPs) for all its Cephs
    and betalactums with filings in the US, European
    and Indian Patent Offices.
  • Highest quality standards in sterile products,
    which normally entail complex manufacturing
    processes.
  • Cost competitive technology for all its products
    regardless of the complexity of synthesis.
  • Amongst the worlds largest integrated
    manufacturing complexes for cephalosporins at
    Alathur and for high end betalactums at
    Aurangabad
  • Sophisticated facilities for niche nutraceuticals
  • A new facility in China (through the Joint
    venture NCPC), commissioned in Sept 2003 to cater
    to the large and growing Chinese market.

All this adds up to high quality at competitive
prices on a global scale
37
Orchids API market plans
  • Orchid commenced operations catering to the
    unregulated markets.
  • Currently, its products are sold in over 75
    countries
  • Orchid has Marketing / Liaison offices in US,
    Russia, CIS and Brazil
  • Orchid has several alliances for API marketing in
    Europe and USA.
  • A marked shift in strategy towards high-end
    products
  • for regulated markets is evident from
  • Over USD 23.6 million (18.6 of total income) is
    from exports to regulated and quality conscious
    markets like US and Europe.
  • Progressive evolution to latest generation Ceph
    molecules
  • Broadening of product portfolio to include
    high-end betalactums
  • Increasing proportion of sales from regulated
    markets (from less than 5 during 1997-1998 to
    18.6 during 2003-04)
  • Invested aggressively over the last 3 years in
    creating
  • state of the art facilities with global quality
    standards for
  • international regulatory compliance (USFDA, EDQM,
  • Australian TGA)

38
Orchids formulations business model
  • Leveraging on its core product knowledge, Orchid
    moved up the value chain by launching Orchid
    Healthcare (OHC), the formulations division
  • OHC started off with a portfolio of antibiotic
    products capitalising on the in-house
    availability of the bulk material
  • The domestic antibiotics market, though one of
    the largest, is also one of the most competitive
    markets with a large number of players
  • Identifying the need for a strategic realignment
    in the product portfolio to include specialty
    products, Orchid acquired a niche formulations
    company, Mano Pharmaceuticals
  • This provided Orchid an entry into the high
    growth high margin chronic / specialty therapy
    segments of anti-diabetes, cardiovascular,
    neuropsychiatry and nutraceuticals products
  • Orchids formulations business now covers acute
    therapy products (Orchid Healthcare) as well as
    chronic therapy products (Mano Pharma)

39
Orchids formulation facilities
Generics facility
Non-ceph formulations facility
Ceph formulations facility
40
Orchids core competencies in formulations
business
  • A market base of around Rs 100 crores per annum
    a critical scale reached with therapeutic
    diversity
  • Increasing share of the chronic therapy products
  • An extremely versatile product portfolio of over
    300 products
  • A large field force of 800 persons (up from 200,
    a year ago)
  • Impressive Doctor coverage of 1,28,000 (up from
    40,000 in 2002)
  • World-class capabilities in formulations
    development, including novel drug delivery
    systems, a competence which few Indian pharmacos
    possess

41
Notable presence across therapies in domestic
formulations market
42
Orchids formulations market plans
  • Exploit optimally the increased product portfolio
    by offering a wider range of therapeutic
    solutions
  • Drive growth in chronic therapy product segments
    of Cardiovascular, Neuropsychiatry, anti-diabetes
    and nutraceuticals
  • Leverage on the product knowledge in the
    anti-infectives segment and launch new products
    or products in new delivery forms with improved
    efficacy
  • Enhanced distribution with a pan-India status
    offers scope for better penetrative reach and
    opens up new markets
  • Be open to inorganic growth through acquisitions
    of companies / brands with segment compatibility
    with current portfolio and no / limited price
    controls.
  • Enhance exports growth through focused efforts in
    large, high growth markets such as Brazil and
    Russia

43
Generics
44
Generics offers a huge market potential
  • Generics - Equal in Quality, competitive in
    price - is a compelling statement for a cost
    conscious managed healthcare service provider
  • According to a US Congressional Budget Office
    study, generics save over USD 8-10 billion every
    year
  • The global generics industry is currently USD 42
    billion in size and is growing at a rate of 10
    -12 pa as compared to the overall growth rate
    of 7-9 pa for the pharmaceutical industry. It
    is estimated to touch USD 60 billion by 2005
  • The US is the largest generics market. (USD 14
    billion)
  • Typically, the generic version is priced at a
    60-70 discount to the original version. This is
    due to the premium pricing of the original
    molecule and low developmental costs associated
    with a generic version
  • In Japan, the discount rates amount to only 10
    due to price control implications. Even this
    situation, provides for healthy margins
  • Generics offer good profitability to the players
    with Indian manufacturers entering the fray,
    profit opportunities could be even more
    significant

US Market Statistics
Source Generics Pharmaceutical Manufacturers
Association of US, IMS, Stada, SSKI
45
The US Generics Opportunity (1/2)
Generics - Introduction
  • To introduce a generic, the applicant must prove
    and ensure that the generic version of the
    product
  • contains the same active ingredient as that of
    the innovators product
  • is identical in strength, dosage form and route
    of administration
  • has the same indications, dosing and labeling
  • is therapeutically bio-equivalent to the
    innovator drug
  • meets the same batch-to-batch requirements for
    strength, purity and quality and,
  • is manufactured under the same strict good
    manufacturing practice regulations as the branded
    pharmaceutical.
  • Data from the Pharmaceutical Researchers and
    Manufacturers of America show that it takes an
    average of 15 years and costs around USD 800
    million for the average drug to reach the
    marketplace
  • Only about 200 in 10000 compounds that enter
    pre-clinical testing make it to human testing
    phase and of these, only one is approved
  • Therefore a new product is provided patent
    protection for a period of 20 years (effectively
    10 years excluding the development period)
  • During this period, the product develops brand
    recognition and goodwill in the marketplace
    (subject to its efficacy)
  • Competition intends to partake of this market
    acceptance of the product
  • Regulations provide for introduction of a generic
    version without the time-consuming and costly
    aspects of clinical trials (Besides, the costly
    discovery process is not required!)

46
The US Generics Opportunity (2/2)
  • To introduce a generic version of a product, an
    Abbreviated New Drug Application (ANDA) has to be
    made with the US FDA
  • An ANDA must have a patent certification. This
    certification must make one of the following
    statements. This certification determines under
    which category (Para) the application is being
    made
  • Para I No patent information on the drug that
    is the subject of the ANDA has been submitted to
    the FDA
  • Para II Such patent has expired
  • Para III The date on which such patent expires
  • Para IV That such patent is invalid or will not
    be infringed by the manufacture, use or sale of
    the product for which the ANDA is submitted (MOST
    LITIGUOUS)

47
Orchid is on the threshold of a major foray into
the highly attractive US Generics market
48
Orchids generics opportunity
  • The generics market space (including US, Europe,
    Canada and Japan) for Cephalosporins and high-end
    betalactums is estimated at USD 7 billion
  • Of this, the US constitutes the single largest
    market (USD 3.2 billion)
  • Orchid proposes to tap this huge US
    anti-infectives generics market space on priority
  • Orchid is planning to capture a significant
    market share in this space, with specific block
    buster products and niche product opportunities.

The current US retail market size of Orchids
range of products is approximately USD 3.2
billion. Key blockbuster products will go off
patent between 2005 and 2008.
49
Orchids generics strategy
Orchids US generics strategy is a comprehensive,
end-to-end connected generics strategy in its
product class
(1) Facilities World class infrastructure
for - Sterile, non-sterile and oral
cephalosporins APIs - Sterile high-end
betalactum APIs - Sterile and Oral
cephalosporin formulations (2) Non-infringing
process A comprehensive array of over 140
process patent applications filed in US,
Europe, PCT and India (WTO) patent offices to
support ANDA applications (3) DMFs / ANDAs
Full range of Drug Master Files
(DMFs) and Abbreviated New Drug Applications
(ANDAs) for all products (First ANDA filed in
April 2004, 9 filed till date) (4) US FDA
approvals A few inspections / approvals
completed, more in pipeline (5) Products A
complete basket of products (8 injectables and 7
orals) Several products going off patent from
2005 providing significant market
opportunity (6) Marketing arrangements
Win-win, long term exclusive pacts for
injectables with Apotex for US and Canada and
with Par Pharmaceuticals for the oral range.
Flexibility to supply select APIs to other
generics players too.
50
Orchid-Apotex alliance
  • Exclusive pact to market 8 injectable antibiotic
    formulations in the US, 3 of them premium,
    high-value products to go off-patent
  • Current US retail market of the 8 injectable
    products is USD 1.4 billion (18 dosage forms and
    36 dosage strengths)
  • First of the kind exclusive broad-based alliance
    by Apotex world-wide
  • Extended to the Canadian market

51
Orchid-Par alliance
  • Covers 7 key oral cephalosporin products, 2 of
    them premium, high-value products to go
    off-patent
  • Broad range with 15 dosage forms and 39 dosage
    strengths
  • Current US retail market of the 7 oral products
    is USD 1.7 billion
  • Exclusive supply and distribution arrangement for
    the agreement period

52
Other highlights of Apotex and Par contracts
  • All ANDAs will be developed and owned by Orchid
  • Manufacture would be from Orchids
    state-of-the-art generics plant at
    Irungattukottai
  • Supplies will be made by Orchid under a
    favourable profit share arrangement
  • In addition, the partners would pay Orchid for
    ANDA related developmental costs over a period of
    time
  • Flexibility to supply API to third parties

53
About Apotex
  • Group turnover of USD 600 million
  • The largest Canadian-owned pharmaceutical company
  • Employs over 5,000 people world-wide in sales and
    marketing as well as research, development and
    manufacturing of pharmaceuticals
  • Product line includes over 200 different quality
    generic pharmaceuticals used by millions of
    patients in 100 countries around the world

54
About Par Pharma
  • A USD 863 million generics major
  • Principal subsidiary of Pharmaceutical Resources,
    Inc.
  • Distributes 80 drugs with 170 dosage strengths
  • Ranked 7th amongst the Top-10 generic companies
    in the US market

55
With Par and Apotex, a complete market coverage
in the US
  • The Apotex alliance for sterile injectables and
    the recent Par arrangement takes all of Orchids
    key antibiotic products to the US market
  • The current US retail market for the agreement
    products (15) is over USD 3 billion
  • As many as 5 (out of 15) products are slated to
    go off-patent progressively from 2005 a few more
    are niche generics
  • Apotex and Pars market standing provides a
    perfect US market entry for Orchids broad
    product line-up
  • Orchid anticipates a quantum jump in sales and
    profitability from 2005 onwards

56
Orchids European generics strategy
Orchids European generics strategy is further
customised to Europe and is already on to high
gear, with similar scope and connectivity
(1) Facilities Inspected by EDQM (2)
Certifications Certificates of Suitability
(CoS) received for nine products
(Cephalexin, Ceftriaxone, Cefuroxime
Axetil, Cefixime, Cefazolin, Cefotaxime Sodium,
Cefadroxil Monohydrate, Cefradine and
Cefuroxime Sodium) more in the
pipeline (3) Marketing Alliances A wide
spectrum of alliances, country-specific and
product-specific, tailored to European needs (4)
Future opportunity Commissioning of
Irungattukottai formulations facility will
provide a major boost to European generics.
57
Track record of rapid regulatory filings in the
cephalosporin space
  • US Generics entry supported by 14 US DMFs and 9
    ANDAs, already filed with the USFDA
  • 7 US DMFs and 7 ANDAs in the pipeline for the
    rest of this fiscal
  • Planned cumulative count of 21 US DMFs and 16
    ANDAs represents one of the most aggressive
    filings record in Indian pharma
  • 18 EU DMFs including 9 CoS applications filed 2
    more in the pipeline
  • MA dossier activity for EU generics gathering
    momentum in parallel

58
The Drug Discovery Opportunity
  • Global pharmaceutical players are keen on
    strengthening their NCE pipeline in alliance with
    niche drug discovery firms
  • high cost and long lead time of in-house MNC
    efforts
  • shrinking pipeline
  • growing pressure from generics, dictating need
    for more innovative drugs
  • Apart from new molecules, potential exists for
  • supply of pre-clinical and clinical quantities
  • pre-clinical evaluation of new leads
  • custom synthesis of select structures /
    processes, and
  • co-development
  • All this presents a major opportunity for Orchid

59
Orchids RD infrastructure
  • Orchid has one of the best RD centres in Indian
    pharma
  • Comprises dedicated divisions for
  • process research
  • pharma research
  • novel drug delivery systems
  • new drug discovery
  • biotechnology
  • Drug discovery infrastructure covers full
    spectrum of medicinal chemistry, molecular
    modeling, in vitro microbiology and pharmacology,
    in vivo microbiology and pharmacology and safety
    toxicology
  • Currently has a team of over 250 scientists
    (Around 150 PhDs / Engineers)
  • Invested over Rs. 800 million in creating
    state-of-the-art infrastructure more in the
    pipeline
  • Facility equipped with latest sophisticated
    analytical instruments like XRD, NMR, GC-MS, LC
    MS, IR/UV etc
  • Established a GLP Pre-Clinical Centre with animal
    house

RD Centre at Sholinganallur, Chennai
Pre-clinical facility
60
Orchids end-to-end business model for drug
discovery
Orchid has complete in-house capabilities for
drug discovery and development from structure
design to drug screening in animal models human
clinicals are outsourced to CROs
61
Orchids drug discovery leads
4 molecules in pipeline (Orchid Stable)
1 molecule in Phase 2(a) (Bexel JV Stable)
 
Three other therapeutic areas being worked upon
by Orchid and Bexel
62
Progress of BLX-1002, anti-diabetes molecule
  • Phase 1(a) and Phase 1(b) human clinical trials
    completed in Europe (double-blinded placebo
    controlled)
  • Phase 1(a), safety and tolerance study, proved
    the safety of the molecule upto 1600 mg
  • Phase 1(b), safety and tolerance study, proved
    the safety of the molecule in multiple dose
    levels upto 200 mg
  • Large therapeutic window, given the anticipated
    human dose level of 20-40 mg
  • Independent Ethics Committee (IEC) cleared the
    molecule to enter proof-of-concept Phase 2(a)
    trials, recently completed

63
About BLX-1002
  • Novel orally active small molecule, developed by
    our US drug discovery JV, Bexel Pharmaceuticals
  • Distinctive mode of action, compared to the
    latest series of anti-diabetes drugs
  • No change in liver enzymes and no weight gain,
    two critical issues with other anti-diabetes
    drugs
  • Outlicensing deals to be considered pursuant to
    discussions with MNCs

64
In research and other knowledge intensive areas,
long term IPR value is built
Orchids cumulative patent filing count is 205.
Further boost to IPR in terms of NDD and NDDS is
targeted in the coming months Patent filings
as of October 31, 2004
65
Financials
66
FY 03-04 Financials
(Rs. Lakhs)
67
H1 FY 04-05 Financials
(Rs. Lakhs)
68
Growth Drivers
69
Summary of Growth Drivers
  • Orchid would derive significant incremental
    revenue, arising from key growth drivers
  • US generics thrust for cephs and high-end
    betalactums
  • Regulated markets (US and Europe) for all APIs
    and Formulations
  • Larger (high volume-high growth) less-regulated
    markets such as Brazil and Russia (APIs and
    Formulations)
  • Specialty formulations from Mano Pharma division
    (Domestic and Exports)
  • NDD licensing and royalty streams in the medium
    to long term

The growth map envisages a quantum jump in
performance, turnover and profitability from
2005
70
Organisational development
  • Formulations and Research business activities
    have been consolidated into two distinct SBUs, in
    line with the generics and drug discovery led
    growth strategy
  • The core bulk business is being further
    strengthened to cater to technology
    development, scale-up, outsourcing and
    manufacturing challenges of diverse therapeutic
    groups
  • Continued induction of talent at various levels
    in chemistry, biology, regulatory, patent and IPR
  • With a robust organisation aligned for the
    future, Orchid expects to achieve the anticipated
    business development

71
The current cephalosporin growth initiatives
would have a significant, positive business
impact from 2005
Entry into the US markets progressively from
2005, both in bulk and pharma
Regulated Markets
With key products to go off-patent from 2005,
step-function jump in revenues and profits
anticipated
Scale and earnings
Orchid expects to extract value from its
discovery activities in India and US, based on
leads under advanced evaluation
Innovation
Orchid is poised for robust growth and
profitability
72
Orchid is now executing a plan for the next wave
of growth from 2008
To become a global, multi-therapeutic
generics and drug discovery major
73
Following initiatives are underway as part of a
future business model
  • New RD laboratories for NPNC products including
    a new kilo lab
  • NPNC manufacturing facility at Aurangabad
  • NPNC formulations facility at Irungattukottai
  • Additional infrastructure for drug discovery and
    development
  • Proposed facilities would be versatile,
    multi-purpose and modular

74
NPNC generics initiative
  • A master list of 64 products drawn up 16
    products under development, in two phases
  • Advanced negotiations for generic partnerships in
    US and EU with beneficial terms
  • Would diversify therapeutic portfolio and provide
    continuous product pipeline
  • Some of the products would provide Para IV /
    first-to-file opportunities

75
Combining current and future business models,
Orchid anticipates USD 1 billion turnover by
2010-11, with significant product-market
diversification
76
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