Hospira pays Orchid $200M for antibiotic API plant

Happy with the sterile injectables business it picked up from Orchid Chemicals & Pharmaceuticals two years ago, Hospira ($HSP) has gone back for more with a deal that takes it further into penems and penicillins.

The world's largest maker of sterile injectable drugs is paying Orchid $200 million for an FDA-approved API plant in Aurangabad, India. The 538,196-square-foot plant was built in 2000, and has 640 workers. The deal also includes an API research and development operation in Chennai, which employs another 190.

"This is a top-of-the-line API manufacturing facility that has been recognized by industry leaders for its high standards," Dr. C. Bhaktavatsala Rao, managing director of Hospira India, says in a statement.

The new plant secures a supply of beta-lactam APIs, Hospira says, as well as improves the company's ingredient costs. Beta-lactam antibiotics, Hospira says, are a class of drugs "with a wide spectrum of antibacterial activity." The injectables maker is already in the U.S. and European markets with injectable imipenem-cilastatin and meropenem.  

Not included in the deal is Orchid's cephalosporin API operations. Orchid keeps those and will continue to supply Hospira with the ingredient.

The deal is the second piece of positive news this week for Hospira, which has been struggling with manufacturing problems and recalls for several of its U.S. plants. The company announced that it is investing about $85 million in its Rocky Mount, NC, plant and has pledged to state and local governments there that it will hire at least 200 more workers in the next three years. In exchange, state, county and local jurisdictions are promising incentives worth more than $13 million over the next decade.

That news, however, was offset by the acknowledgment that Hospira has received another warning letter from the FDA, this time for manufacturing problems with its Plum infusion pump made at a plant in Costa Rica. 

- read the release