Looking to cut costs, Hospira ($HSP) is practicing some vertical integration, spending $200 million to acquire an Indian API-producing plant run by Orchid Chemicals & Pharmaceuticals.
Based in Aurangabad, Orchid's plant produces beta-lactam APIs used in antibiotics. The FDA-approved manufacturing plant was built in 2000 and employs 640 people, all of whom will be retained by Hospira. Under the deal, Orchid will keep its cephalosporin API business and facilities, while Hospira will also take over the company's API R&D shop in Chennai.
"This is a top-of-the-line API manufacturing facility that has been recognized by industry leaders for its high standards," C. Bhaktavatsala Rao, Hospira's managing director for India, said in a statement. "We look forward to welcoming our new colleagues from Orchid and leveraging their expertise to continue to bring high-quality, lower-cost products to patients around the world."
Hospira will be able to slash costs on its beta-lactam antibiotics by buying out its supplier, a company spokesman told Outsourcing-Pharma, and the acquisition will boost the company's presence in India. But will the company look to producing commercial APIs to augment its fill-finish business? Hospira will keep an "open mind relative to other API opportunities that may arise," the spokesman said.
In any case, the new plant is a spot of positive news for a company recently beset by setbacks. Hospira has faced FDA scoldings and recalls related to its sterile injectables in the U.S., and last week the company disclosed another warning letter, this time for its Costa Rica facility.
- read Hospira's release
- check out FiercePharmaManufacturing's take