Ranbaxy Laboratories (Ranbaxy) and Orchid Chemicals & Pharmaceuticals (Orchid) have announced that they have entered into a business alliance agreement involving multiple geographies and therapies for both finished dosage formulations and active pharmaceutical ingredients (APIs). Additionally, this agreement would establish a framework for enhanced future co-operation between the two companies. The business alliance between the two comes even as the Ranbaxy Group has stretched its holding in Orchid to 14.7 per cent through market operations, triggering intense speculation about a possible takeover attempt on Orchid. With the holding of promoters in Orchid dropping to 16.2 per cent, the Ranbaxy Group's share-buying exercise has only heightened the possibilities for a takeover. The drop in equity holding was caused by the sale of 5.6 million shares by a couple of lenders with whom the promoters had pledged seven million free shares. The promoters had borrowed about Rs. 80 crore from India Bulls Financial Services and Religare Enterprises to help them raise their stake in the company from 17 per cent to 24 per cent. They had bought five million shares from the market during March-April 2007 to raise their stake. K. Raghavendra Rao, Managing Director, Orchid, said the talks for a business alliance with Ranbaxy were on much before the developments on the share front. He expected the business alliance to fetch 'significant revenue for Orchid'. Mr. Rao told The Hindu that the alliance would not upset the existing applecart (business). The incremental revenue would be determined by the product and market configuration of any new business initiative. To a question, he said Orchid would continue to drive drug development and make products. The alliance would leverage the marketing strength of Ranbaxy to push sales numbers for both, he said. On increased co-operation between the two companies, Mr. Rao said, "what is known is captured. The template is ready. A super structure can be built easily, as the framework is already there.' Asked if the alliance with Ranbaxy and the share buying episode would constrain Orchid, Mr. Rao said, "The management freedom should continue. It should not be dictated by the shareholders.' Informed institutional sources said that Orchid promoters were indeed trying to secure their positions. Mr. Rao, however, has preferred to keep his cards close to his chest. With institutional holders reportedly not enthusiastic about selling their shares in Orchid, industry observers felt that the Ranbaxy Group would do nothing hastily. Ranbaxy's Q1 profit up PTI reports from New Delhi: Driven by a robust growth in emerging markets and North America, Ranbaxy Laboratories on Tuesday reported a profit after tax of Rs. 153 crore for the first quarter ended March 31, 2008, a 7.21 per cent growth over the corresponding period last year. "Emerging markets continue to be the major contributor to the company's growth, accounting for around 55 per cent of our total sales, followed by developed markets which account for 40 per cent,' Ranbaxy Managing Director and CEO Malvinder Mohan Singh told reporters here. On the company's plans for alliances, Mr. Singh said at present it was negotiating with a firm for a deal similar to what it has with GlaxoSmithKline. "Initially, it will be with Ranbaxy but once the demerger takes place it will be transferred (to Ranbaxy Life Science Research),' Mr. Singh said. Mr. Singh said Ranbaxy was at present involved in about 19 patents litigations with an innovator value of $27 billion . Out of these, the company had been able to settle four that had a value of $8-10 billion.