Morepen Labs surges after USFDA grants twin approvals

The stock gained 11% after this news.

Jul 30, 2018 11:07 IST India Infoline News Service

Morepen Laboratories has received USFDA approvals for both its bulk drugs manufacturing facilities situated in Himachal Pradesh. While the Baddi facility has got USFDA approval for the manufacture of bulk drug Atorvastatin Calcium, a cholesterol reducing drug, the Masulkhana facility has recently got the nod for manufacturing an anti-asthma bulk drug Montelukast Sodium for export to the US market.

Following this news, the stock was trading at Rs35.45 up by Rs3.6 or 11.3% from its previous closing of Rs31.85 on the BSE.

The scrip opened at Rs32.45 and has touched a high and low of Rs35.60 and Rs32.45 respectively. So far 32,32,410 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs1,432.77cr.

It is significant to note here that the US market size for these two bulk drugs is approximately Rs5,000cr and Rs2,000cr, respectively. The two APIs collectively contribute around Rs150cr annual revenue to the company’s top line and constitutes 44% of the company’s total API business.

The main API facility situated at Baddi (Himachal Pradesh) houses multiple plants for manufacture of different drugs, including Atorvastatin, and is spread across an area of around 50 acres. The Masulkhana facility of Morepen Labs got its first USFDA approval for the manufacture of ‘Loratadine’ in the year 1999, followed by another USFDA approval for ‘Desloratadine’ in the year 2011. “Montelukast” is the third API approved out of this plant. 

Speaking on the development, Mr. Sushil Suri, Chairman and Managing Director, Morepen Laboratories said, “History has repeated itself with the company once again securing twin USFDA approvals, without any adverse remarks from the US regulator. With this development in place, the company is set to expand its foothold in the combined Rs7,000cr US market for Atorvastatin and Montelukast. The two APIs will also strengthen company’s existing APIs portfolio comprising Loratadine and Desloratadine in the US market.”

Morepen Labs got an initial USFDA clearance for Montelukast Sodium in December 2017, based upon approval of customer’s ANDA which triggered an inspection of its Masulkhana facility in 2018. The facility had gone for regular inspection for all the three products manufactured therein viz. Loratadine, Desloratadine (already approved) and Montelukast (new approval).

Similarly, the Baddi plant was also inspected by USFDA for the first time, triggered by a US customer for supply of Atorvastatin to the US markets. The inspection got concluded this month itself. This plant mainly manufactures Atorvastatin amongst other APIs. Following this inspection, both the facilities of Masulkhana and Baddi have been approved without any deficiency and USFDA has not given any adverse remark/observation (i.e. no Form 483 has been issued), besides a complete approval of the two plants’ quality parameters has been accorded

Atorvastatin and Montelukast have shown great growth potential during last 5 years, with a CAGR of 25% and 17% respectively. The company expects decent incremental revenues with more US business coming to company’s kitty in the coming years.

The Masulkhana plant was also inspected and approved by the Therapeutic Goods Agency (TGA), Australia in 2015; minor improvements were made in keeping with the TGA requirements. In addition, the plant has received an EU-GMP certification following an inspection by the Slovenian drug regulatory authorities in 2013.

This apart, Morepen also supplies the APIs for Canada and the European Union since 1999, and intermediates for Loratadine for the Japanese market. Its application for marketing of API (known as DMF or Drug Master File) is under consideration of the Japanese authority.

The company has a very strong regulatory department and has filed 45 Drug Master Files for all APIs with international documentation and validation data. It has been granted six certificate of suitability (COS) applicable in 28 European countries.

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