Orchid Pharma Ltd

Stock Opportunities Untested - but worth a good look
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Orchid pharma partnered with Cipla to launch Cefepime-Enmetazobactum in India.

This is probably one of the best thing done by Orchid in marketing new drug.
Definitely there will more interest for novel drug + known company(Cipla) than novel drug+ not a known company( Orchid), not purely based on scientific reasons though. Many professional would not have heard orchid pharma name , where as Cipla is established company with good presence, brands and already supplying many antimicrobials like Tazact(pipercillin tazobactum),Merocrit( meropenem) , Vanlid( vancomycin), Tiganex( tigecycline) etc…which are used in hospitals/critical care.
Even though Orchid has mentioned that they will be launching their own hospital division in few quarters that would have delayed the ramp up in sales and reach across the country.

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Orchid Pharma -

Q4 and FY 24 concall and results highlights -

Q4 outcomes -

Sales - 217 vs 209 cr
EBITDA - 42 vs 41 cr
PAT - 33 vs 66 cr (due exceptional gain in previous FY)

FY 24 outcomes -

Sales - 819 vs 666 cr
EBITDA - 154 vs 132 cr ( margins @ 17 vs 16 pc )
PAT - 94 vs 55 cr ( despite exceptional gain of 32 cr in Q4 of last FY )

Enmetazobactum has been approved in both US and EU. This opens up lucrative royalty opportunities for the company in the near future

Expected to launch Enmetazobactum in India by Q2 FY 25. Have partnered with Cipla for sales and marketing in the Indian mkt

Have filed ANDA for Cefepime + Enmetazobactum combination in the US mkt. This should also aid company’s US revenues in a meaningful way

Have completed the land acquisition near Jammu for company’s 7ACA project ( it is a key intermediate for manufacture of Cephlalosporins ). Should commission this facility by Mar 26. Aim to ramp up production to > 60 pc levels within first year of operations

Should also be able to commercialise the Cefiderocol manufacturing facility ( a molecule in-licensed from Shionogi, Japan ) by mid 2026

Regulated : Unregulated revenue share @ 40 : 60

Oral : Sterile revenue share @ 75 : 25

Company’s base business ( except Cefiderocol, Enmetazobactum ) should continue to grow at 20 pc CAGR for next 2-3 yrs

Company has hired 40 odd employees to launch their dedicated hospitals division selling antibiotics directly to Tier-1,2 city hospitals

Company has out-licensed Enmetazobactum to Allecra Therapeutics for sale in US and Europe. Expected to be launched by Q2 FY 25 ( tentatively ). After the ramp up is complete ( in 2-3 yrs ) expected to generate a topline of $ 200 - 300 million with a 6-8 pc kind of royalty to Orchid Pharma

Disc: holding, biased, not SEBI registered

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Orchid Pharma Forms Orchid AMS | NDTV Profit (youtube.com)
Interview with the CEO, Rajnish Rohtagi.

  • Expects 250-300 Cr in the new division in next 2-3 years. This roughly provides us a 10-12k crores addressable market (injectables not oral: ICU, hospital wards), and we are targeting a 3000 cr market, this translates to a 10% market share.
  • Sales to begin in next 2-3 Months in this division.
  • The division will primarily focus on injectable antibiotics used in hospitals, avoiding the crowded oral tablet market.
  • Sales will come from a wide range of Antibiotics.
  • The division plans to launch over 30 antibiotic molecules within the next 60 days.
  • Cefiderocol will be launched within the next 1 year - will be the only distributor for it with in India & also be manufacturer/supplier to the sponsor, GARDP.
  • Antibiotics is a hypercompetitive space, but Orchid wants to differentiate itself through a wide product range and addressing AMR in collaboration with hospitals.
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Results Q1

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Below is the link for the latest quarter results

https://www.bseindia.com/xml-data/corpfiling/AttachLive/01292b1b-b156-42ba-9183-e2f424bd62ff.pdf

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Interview with Manish Dhanuka, Managing Director, Orchid Pharma
(https://www.youtube.com/watch?v=YAfWS0bMJow)

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Orchid - Investor Roadshows

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Orchid Pharma Result update - Inline Revenue, gross margins come higher

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Further to my view above about clear line of sight of 400-500cr PAT in 3-4 yrs, the latest concall provided further clarity as to what to expect beyond that.

3 key takewawys for me:

  1. Orchid is well poised to be a leader in the new molecules which would be going off patent as most of these would be in the injectable space. (Note: there is only 1 FDA approved Cephalosporin sterile facility in India and only 1 in China as per Orchid ppt Nov 2023)
  2. 7ACA project will act as a launchpad for the fermentation based drug research and development
  3. Cefidorocol project with Shinogi will demonstrate company’s capabilities, opening opportunities to manufacture for other innovators as well (CMO). This will also include an element of development (D), in other words CDMO but at a bigger scale and with instant commercialization.

All this implies that after the initial 3-4 year period, in which the PAT is expected to reach 400-500cr, the company can keep growing at ~20% or more.
Companies with such growth rates trade above ~60 PE or above. Implying a valuation of above 30,000cr in 3 yrs

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Could someone please explain the rationale behind Debt Management having guided any specific plan for this debt?

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Sharing here the latest announcement by Orchid pharma

Does anyone has any more details about this merger?
Any kind of inputs are welcome

dr.vikas

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Summarizing the present Optionalities in Orchid Pharma and thier expected timelines:

  1. Enmetazobactam - A New Chemical Entity which when combined with the antibiotic Cefepime, is indicated to treat complicated Urinary Tract Infections (cUTI) and other severe hospital-acquired infections caused by resistant bacteria. This asset was structured through an out-licensing agreement with Allecra Therapeutics a European biopharmaceutical company, which was tasked with further development and global commercialization. Orchid Pharma entitled to a sales-based royalty of 6-8% on worldwide sales. The total addressable market for the drug has been projected to be around US$ 1 billion over a ten-year period. However, Allecra Therapeutics, has filed for bankruptcy. This development has had a direct and immediate negative impact on Orchid Pharma and the Co is at the preliminary stage of evaluating all legal options.
    However, OPL has retained the marketing rights for India and is establishing a new division, Orchid Antimicrobial Solutions (AMS), to launch and market the product domestically. The Co has named this brand Orblicef and has partnered with Cipla to launch the same. Also, roughly about 10,000 patient work was done in half year alone, while Co estimated the full year figure to be 10,000. This looks promising. The Mgt also stated that the margin on Orblicef was higher than the Co’s current gross margin profile of 41%. The division is currently EBITDA negative and is likely to remain a drag for roughly 2 more years before turning profitable (say FY27 end).

  2. Cefiderocol - The company has entered into a sub-license agreement with the Global Antibiotic Research & Development Partnership (GARDP) to manufacture and supply Cefiderocol, an antibiotic developed by the Japanese firm Shionogi. The validation batch is expected to be around December’26 while commercial sales of the medicine is expected to start by Sept’27. This agreement covers 135 low- and middle-income countries, including India, further strengthening Orchid’s position in the AMR space. The company is investing US$ 10-15 million (85 - 125 Crs) to establish a dedicated manufacturing facility for this product.In addition to Cefiderocol, the company continues to leverage its R&D capabilities in other cephalosporins such as Ceftaroline and Ceftazidime/Avibactam.

  3. The 7-ACA Backward Integration Project - Orchid Pharma is undertaking a significant capital expenditure project for the backward integration into a key starting material centered on the manufacturing of 7-aminocephalosporanic acid (7-ACA). Orchid has set up a subsidiary called Orchid Bio Pharma Limited for undertaking PLI-based capital expenditure project in Jammu. As per CARE’s rating report, the estimated cost of the project is ₹596 crore, of which ₹90 crore is expected to be funded of QIP proceeds, ₹59 crore from internal accruals and remaining ~₹447 crore by debt. Out of this, ₹120 crore has already been expended towards the facility.
    Furthermore, this plant will have a committed capacity to produce 1,000 tons per annum (TPA) of 7-ACA, a critical intermediate for the synthesis of a wide range of cephalosporin antibiotics. Currently, a substantial portion of 7-ACA is imported, primarily from China, making Indian pharmaceutical companies vulnerable to supply chain disruptions and price volatility. By manufacturing this key material in-house, Orchid aims to achieve greater control over its supply chain, ensure raw material security, and significantly enhance its profitability margins by capturing a larger part of the value chain.
    Given, the project has been approved under the Indian government’s Production-Linked Incentive (PLI) scheme for Key Starting Materials (KSMs), it will be entitled to interest subvention and tax concession benefits. Due to delay in land acquisition, the project is now reported to be facing a six-month delay. As such, the expected completion date pushed to December 2026 and commercial operations to FY28.

  4. US FDA Compliance Cleared - On May 29, 2025, when Orchid Pharma announced that it had received an Establishment Inspection Report (EIR), (USFDA) for its Active Pharmaceutical Ingredient (API) manufacturing facility located in Alathur, Tamil Nadu. The EIR was issued with a “Voluntary Action Indicated” (VAI) status, a favorable outcome. This successful closure of the inspection reaffirms the Alathur plant’s compliance with the USFDA’s stringent cGMP (current Good Manufacturing Practices) standards. For an export-oriented API player like Orchid, this is a critical development. It clears a major regulatory overhang and ensures continued, uninterrupted access to the highly lucrative and regulated US market.

  5. The Dhanuka Laboratories Amalgamation: The primary objective is to create significant synergies by combining two entities operating in the similar business of manufacturing and distributing pharmaceutical products, with a shared focus on Active Pharmaceutical Ingredients (APIs). The goal was to create a much larger company with the potential to reach a sales turnover of Rs. 1,400-1,500 crores and an EBITDA of Rs. 200-250 crores, thereby creating a high-value company in the future. Recently, the scheme was approved by shareholders with 97.5% in favor of the same.

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It is important to note the positive development shared by Orchid on July 30, announcing the acquisition of Allecra Therapeutics’ assets in Germany and France, including all IP and regulatory rights for Enmetazobactam. This transaction gives Orchid 100% global ownership of the molecule, directly addressing the uncertainty created by Allecra’s insolvency earlier this year.

Over the past two quarters, Orchid Pharma’s investors have grappled with growing uncertainty surrounding its partner Allecra Therapeutics and the global commercialization of Enmetazobactam (EXBLIFEP / Orblifec). The market has reflected this unease - Orchid’s share price corrected from nearly 2000 to 600 in less than six months. While not all of this fall can be attributed to Allecra’s bankruptcy, it has undoubtedly been the single biggest factor.

Why was there uncertainty (Q3 & Q4 FY25) about Enmetazobactam (which was supposed to be a high probability optionality for Orchid):

  • Delayed Partnering in the US
    In Q3 FY25 (Feb 2025), management admitted frustration with Allecra’s inability to finalize a US partner despite FDA approval, noting poor communication and Orchid’s lack of control .
  • Royalty Uncertainty
    Q3 FY25: Orchid confirmed receipt of some royalties, but numbers were small and inconsistent, with tracking dependent on Allecra’s quarterly reporting .
    Q4 FY25: By May 2025, royalties had again not been received for Q1 2025, and management said the legal enforceability of the decade-old agreements was still under evaluation .
  • Limited Visibility
    Management repeatedly emphasized that they had no direct control over Allecra, lacked timely data, and were still awaiting key documents needed to assess their legal and financial position .

This created investor anxiety, with concerns about losing time on patent life, uncertainty over royalties, and lack of clarity on the US launch despite strong demand potential.

What we know about the resolution (July 30, 2025):

  • Orchid has since moved decisively.
  • Acquired Allecra’s assets in Germany and France, including IP, trademarks, regulatory filings, contracts, and customer agreements.
  • Secured 100% global ownership of Enmetazobactam, marking the full repatriation of India’s first novel antibiotic discovery.
  • Eliminated the counterparty risk that had plagued investors since early 2025.

What This Means Going Forward:

  • Management deserves credit: They moved swiftly to secure critical IP while it was available through the bankruptcy process.
  • Royalties remain a question mark: Past dues may be irrecoverable, and clarity on future monetization is awaited.
  • New strategic possibilities: Orchid can now explore direct licensing, co-commercialization, or independent global expansion of Enmetazobactam.
  • Visibility has improved: With ownership consolidated, Orchid is no longer dependent on Allecra’s decisions or reporting.

Key Risks to watch out:

  • Commercial Execution: Orchid must now independently chart a global commercialization plan - execution risk is very high (unless they can find a partner).
  • Patent Life Erosion: Lost time in 2024–25 could shorten the effective monetization window.
  • There are smaller risks when it comes to recoverability of royalties, financial impact of the acquisition, regulatory and partnering delays, etc which we need to understand as well.

The thesis has undoubtedly shifted - While Allecra’s insolvency initially clouded the outlook, Orchid is taking decisive steps to take control of their strategic asset. Visibility on Enmetazobactam’s future is stronger than it was in Q3 and Q4. The upcoming concall should shed more light on Orchid’s out-licensing or commercialization strategy - a key next step for value unlocking.

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Found this slightly dated announcement from Orchid. Would request people following the company if they can provide an explanation

The highlighted part of the CARE credit report must be typo, right?
Link to the report : https://www.careratings.com/upload/CompanyFiles/PR/202503140343_Orchid_Pharma_Limited.pdf

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Not a typo - Enmetazobactam was out-licensed to Allecra back in 2013, which explains why royalties and global commercialization were dependent on them. Later, Allecra sub-licensed to Advanz in Europe and Shanghai Haini in China, while Orchid retained India rights (branded as Orblifec via Cipla).

The new development here is Orchid’s July 30 announcement where they’ve acquired Allecra’s assets in Germany and France, including all IP and regulatory rights. This means Orchid now has total global ownership of Enmetazobactam, removing the counterparty risk from Allecra’s insolvency. Will have to understand what’s the status of the China rights in the next concall though.

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