MUMBAI/DELHI, APRIL 22: Ending speculation over a takeover battle, Orchid Chemicals & Pharmaceuticals Ltd has entered into a “business alliance agreement” with Ranbaxy Laboratories involving multiple geographies and therapies for both finished dosage formulations and active pharmaceutical ingredients.

“Additionally, this agreement would establish a framework for enhanced future co-operation between the two companies,” Ranbaxy said in a regulatory filing to the stock exchanges. Ranbaxy said it had built up a 14.7 per cent stake in Orchid Chemicals through its subsidiary Solrex. However, chief executive officer and managing director Malvinder Singh declined to comment on whether Ranbaxy would increase its stake.

Speaking on the alliance, Malvinder Singh said, “Orchid is a niche player in the global pharmaceutical industry with an impressive track record, particularly in sterile products. We are pleased to enter into this long-term strategic alliance with Orchid. The agreement will be mutually beneficial and synergistic, allowing both organisations to leverage each others inherent strengths.”

Singh also declined to comment on the revenue sharing models and the impact of the agreement on Orchid’s existing alliance with other companies. Solrex had acquired the stake over several weeks, triggering speculation that it was planning a hostile takeover of Orchid. Under Sebi rules, Ranbaxy will have to make an open offer when its stake exceeds 15 per cent.

K Raghavendra Rao, managing director, Orchid, said, “We are happy to join hands with Ranbaxy, India’s largest pharmaceutical Company. Ranbaxy’s global scale and market reach and Orchids state-of-the-art development and manufacturing capabilities would expand the business of both Companies. We believe that this will be a win-win arrangement for both companies.”