Orchid Chemicals & Pharmaceuticals Limited: Managing the Value Chain Transformation

Orchid Chemicals & Pharmaceuticals Limited (Orchid) is an Indian pharmaceutical company, which commenced its operations in 1994. Over a span of 10 years, the turnover of this company has increased from US$11 million to US$153 million. The company's profit after tax registered a five fold increase from US$1.3 million to US$6.8 million in the corresponding period. Early success was a combination of pricing flexibility, lower production cost and business opportunities in unregulated markets. Orchid decided to explore opportunities for the manufacture of generic drugs in the regulated markets and formulations in the domestic market. Diversification to basic research was also considered. Cooperation and joint ventures were the primary route to expand and explore new molecule discovery. By 2005, Orchid was no longer a single-product company, its business had widened to multiple products in bulk, formulations and generics, in both regulated and unregulated markets. Orchid was making its presence felt in its novel drug delivery systems and new drug development processes. In 2005, Orchid faced several challenges related to financial leverage and risks, leadership, managerial challenges associated with joint ventures, balancing the new business model, setting global trends in being a pioneer in the industry, addressing shareholders' concerns and evolving an appropriate organization culture and process.