Ranbaxy appears to be making a move on fellow Indian firm Orchid Chemicals & Pharmaceuticals which local observers believe could end in a strategic alliance or even a takeover.

Newspapers in India have been watching the activities of Solrex Pharmaceuticals, a previously unknown entity which has been buying up shares in Orchid. Solrex has reportedly raised its stake in the latter firm to 14.7%, very close to the 15% threshold that would trigger an offer to the public shareholders, claims the Economic Times.

It is thought that Solrex is part of the Ranbaxy group, but the latter has yet to confirm whether that is the case. However Ranbaxy chief executive Malvinder Singh has said that his company is not planning any hostile takeover bid for Orchid.

However it seems that something is afoot, and Orchid’s managing director K Raghavendra Rao told Financial Express that “I haven’t received any communication on the further mobilisation of stake. I am facing an impossible situation. Let something happen and then we will react.”

Orchid sets up Japanese subsidiary
The attraction of Orchid lies in its antibiotics portfolio, notably its injectible cephalosporin products, and 25 of its generics have been approved in the USA. Furthermore, Orchid has just announced the formation of a subsidiary in Japan.

Mr Rao stated that the Japanese generic market is likely to grow rapidly over the next few years. He added that “we expect to be among the leading players in this market with a turnover of about $100 million in about five years’ time”.