Hospira, a global provider of injectable drugs and infusion technologies, has agreed to acquire an active pharmaceutical ingredient (API) manufacturing facility, together with an associated R&D facility, from Orchid Chemicals & Pharmaceuticals of India for approximately $200 million.

Acquisition of the modern, FDA-approved facility, located in Aurangabad, India, is expected to reduce Hospira's costs, support continuity of supply of key antibiotic products and pave the way for future API development.

"Our decision to acquire Orchid's world-class API facility demonstrates Hospira's continued dedication to the antibiotics space, enhancing cost-competitiveness and ensuring continuity of supply," said Dr. C. Bhaktavatsala Rao, managing director, Hospira India. "This is a top-of-the-line API manufacturing facility that has been recognized by industry leaders for its high standards.”

The proposed acquisition, which follows Hospira's 2010 purchase of Orchid's generic injectable finished-dosage form pharmaceuticals business, will enable Hospira to vertically integrate into certain critical beta-lactam antibiotic APIs (penems and penicillins), and is also expected to improve Hospira's standard cost position in this therapeutic space. In addition, controlling the source of these beta-lactam APIs will improve the company's security of supply. Orchid will retain its cephalosporin API business and facilities, and will continue to supply Hospira with this associated API.

The facility is staffed by approximately 640 employees, including chemists, engineers and technicians, and received the International Society of Pharmaceutical Engineering's (ISPE) Facility of the Year Award for Regional Excellence in 2009. Constructed in 2000, the facility includes 50,000 square meters of space. Hospira's purchase also includes an associated Orchid R&D facility located in Chennai, India, that will be primarily directed to beta-lactam and other APIs with approximately 160 scientific personnel and an additional 30 employees supporting the facilities.

The transaction was unanimously approved by Hospira's and Orchid's boards of directors and is expected to close in the fourth quarter of 2012.