Orchid Pharma and its wholly-owned subsidiary, Orchid Bio Pharma have entered into an MoU with overseas technology provider for in-licensing of ‘7ACA’, a technology to reduce import dependence and improve margins through backward integration process.

7-ACA (7-aminocephalosporanic acid) is the core chemical structure for the synthesis of cephalosporin antibiotics and intermediates.

In a regulatory filing, Dhanuka Laboratories-owned Orchid Pharma said, on July 16, 2022, Orchid-Bio Pharma Ltd received approval from competent authority under the Production Linked Incentive (PLI) Scheme for manufacturing of product ‘7 ACA’ and that the current MoU is to in-license the 7 ACA technology.

In July last year, Orchid Pharma announced its subsidiary Orchid Bio-Pharma received approval from IFCI to manufacture ‘7 ACA’ with a committed capacity of 1,000 tpa. The company then said, the technology will help in backward integration, thus reducing dependence on sourcing from China, and aid in improving margins.

In the Q3FY23 earnings call, Mridul Dhanuka, Whole-Time Director, Orchid Pharma said, the company is currently operating at a gross margin of 40-40.5 per cent and it may inch up 1-2 per cent going forward. “A lot of this synergy will come more into play when our PLI project is implemented and we would have inhouse backward integrated some of the key raw materials.”

On Friday, stocks of the Chennai-based Orchid Pharma closed at ₹377 apiece on NSE, down by 11.5 per cent from the previous day’s close.

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