Morepen Laboratories Ltd: For mind-boggling profits
Time and again, we have heard the phrase ‘health is wealth’. The Wellness Industry will continue to do well at all times of booms and busts, ups and downs. In India, preventive medical care is still at a nascent stage as we spend very meagerly on this sector and avoid preventive treatments unless the doctor rings the alarm bells. The Morepen Laboratories Ltd (MLL) share is gradually coming out from its hibernation mode and is getting set to see great heights once again. MLL’s state-of-art manufacturing facility at Baddi comprises a scientifically integrated complex of 10 plants, each with a specific product profile. The Company’s extensive R&D facilities and factories are manned by a dedicated team of PRESS RELEASE STOCK SCAN A Time Communications Publication 19 professionals who ensure stringent quality standards. Today, MLL exports its products to several countries across the world. Busy lifestyles and increasing work pressures have made it imperative to make self-monitoring diagnostic equipment, a part of every household. MLL has tied up with international majors in this segment and has brought to India, a range of products that help people monitor their health on a day-today basis thereby seeking remedies well in time. MLL’s brand ‘Dr. Morepen’ has a strong presence in the Wellness industry, with popular Over-the-Counter (OTC) products such as Burnol, Lemolate, Sat Isabgol, etc. Dr. Morepen’s self-health FMHG (Fast Moving Health Goods) product portfolio includes Burnol (for burns and cuts), Lemolate Gold (for Cold Relief), Fibre-X Sat-Isabgol (Natural Laxative), Fever-X (Fever Reducer), Option72 (Emergency contraceptive), Dabgel (Antacid), MoreVital+ (Dietary Supplement), Exygra (Sildenafil Citrate), QuickChek (Pregnancy Card), among others. These products are marketed to over 2 lakh retail outlets through a vast marketing and sales network. MLL’s consumer care division has successfully introduced products such as DAB (an Antacid with fruit flavours - a new product in the gastro category), Sugar care (a low calorie Sweetener), Garlitone (garlic tablets), Mintina (peppermint tablets) and Slim Well (weight reducing agents). MLL was incorporated as a private limited company in 1984 and was converted into a public limited company in 1992 and it hit the capital markets in 1993. The Company manufactures CIMC chloride, 7-ADCA acid Cephalexi Monohydrate, formulations etc. Its bulk drug manufacturing unit manufactures life-saving drugs such as Ampicillia Trihydrate and Cloxacillin Sodium. In 1995, MLL introduced two new molecules (Cisapride and Loratadine) in bulk and formulation forms. In 1996, the Company tied up with the US-based Stryker Corporation for marketing its medical equipment in India. In 1998, MLL entered into contracts with reputed European generic companies to export bulk drugs. It also expanded its marketing network for exports to newer markets. It entered the US markets with the filing of drug master file (DMF) with the USFDA which was duly acknowledged. The Company also established facilities for herbal research and development at Gurgaon (Harayana) under its technology support services program, with financial assistance from ICICI. In 1999, MLL signed an agreement with PARI GmbH, Germany for marketing its inhalation systems for respiratory diseases in India, thereby becoming the youngest Indian company to obtain USFDA approval. MLL currently has an installed capacity of over 6 tons p.a. and going forward, over 50% of the Company's revenue is expected to be generated from this product alone. The Company's manufacturing facilities at Parwanoo (Himachal Pradesh) for Loratadine obtained the USFDA approval in 2000. Loratadine became the fifth largest selling drug in the world with over 50% market share among all antihistamines and its production capacity was doubled to 24 tons p.a. MLL is all set to introduce vitamin products in its consumer care product segment for pregnant women - Zimvit-P (to provide the necessary vitamin support to pregnant women) and Zimvit-L (to support post-pregnancy vitamin requirements). The Company has recently launched Atorvastatin and Fluvastatin (both cholesterol reducers), Paroxetin (antidepressant), Losartan (anti-hypertensive), Zafirlukast and Montelukast (both anti-asthmatic). New products lined up in its OTC segment include hospital foods, health water, Cold-N-Fever tablets, Vitamin-C tablets and three variants of DAB. MLL has entered into a joint venture agreement with a US-based company for carrying out Research and Development (R&D) activities in medicinal biotechnology. It has also tied up with 5 leading generic companies in Canada- Apotex, Novex Pharma, Genpharm, Novopharm and Technilab for supplying non-sedative antihistamine and loratadine. In 2001, MLL formed a technology-cum-marketing joint venture with a multi-million Company, DiaMed AG. The launch of the Optimal Rapid Malaria Test Kit – a product from DiaMed AG, leading in blood group serology added more credibility to MLL’s reputation. The Company also entered into a strategic manufacturing joint venture with the USbased Ameritek Inc, a global player in rapid diagnostic test kits, followed by a marketing alliance with Beurer GmbH & Co to sell a range of diagnostic and therapeutic monitoring systems to monitor health at home. In 2002, MLL entered into a joint venture with the Apollo Hospitals Group for providing emergency services and subsequently acquired Lifespring, a chain of health and beauty stores, for Rs.12 crore from Total Care Pvt Ltd. It also acquired Lemolate, a premium brand of Yash Pharma Laboratories Ltd in the cough and cold category. Additionally, it also tied up with an Italian Diagnostic company, A Menarini, to market its gluco-meter range in India and also with Analyticon to market its urine analysis reagent strips.
In 2004, MLL bagged the international patent of a new crystalline form (VI) of Atorvastatin, a cholesterol-lowering drug. It also obtained the USFDA approval for its Active Pharmaceutical Ingredient (API) manufacturing facilities at Masulkhana (Himachal Pradesh). In 2005, MLL entered the anti-diabetics market of the US with its insulin sensitizer-Pioglitazone Hydrochloride (Actos). It bagged the international patent for its cholesterol drug and also joined the Lipitor Club in the US. The Company has announced 52 DMF filings for 6 products across 10 European countries. Financial Parameters: For FY 2015, MLL reported total revenue of Rs.370.26 crore with profit from operations of Rs.9.36 crore. Its finance cost dragged its net profit to Rs.2.14 crore. The Company posted excellent Q1FY16 results with sales at Rs.99.28 crore and net profit at Rs.2.5 crore, fetching an EPS of Rs.0.05 (after deducting a tax of Rs.0.6 crore and interest of Rs.1.81 crore as against Rs.2.04 in Q1FY15). This indicates that the Company is probably managing its debtor days more efficiently thereby reducing the working capital requirement of the Company. If this trend continues, MLL’s operating margins will improve and its bottom line may beat its estimates. Projections for FY16: MLL has launched a few profitable products this year, the benefits of which will be reaped in the coming quarters. The Company has already turned around and is expected to show improved performances in the next few quarters. Its share is currently trading at Rs.16.69 and has the potential to zoom to Rs.40 within a year. Its all-time high is Rs.640 (pre-split) and Rs.128 (ex-split). Markets have always rewarded turnaround companies. Marksans pharma bounced back from Rs.2 to Rs.125 in less than 2 yrs. Mangalam Drugs and Organics jumped from Rs.8 to Rs.180 and Caplin Point from Rs.15 to Rs.1500. Can Morepen Laboratories lag behind? In fact, MLL has to its credit, some of the most valuable brands and products and is a promising company. Shareholding pattern: The promoters hold 34.54% of the equity capital, FIIs hold 10.87%, and DIIs hold 6.43%, leaving the balance 48.16% stake with the investing public. The market cap of the company at its CMP of Rs.16.69 is Rs.591.66 crore and with a book value of Rs.4.3, its P/BV works out to just 3.9. The share’s deliverable quantities lie between 46-50%. A company with a solid brand name and sounds financials, that exports to over 45 countries and promotes pharmaceutical products of international standards to generic markets, and produces innovative health products with a commitment to quality and service, certainly deserves a much better valuation.
Time and again, we have heard the phrase ‘health is wealth’. The Wellness Industry will continue to do well at all times of booms and busts, ups and downs. In India, preventive medical care is still at a nascent stage as we spend very meagerly on this sector and avoid preventive treatments unless the doctor rings the alarm bells. The Morepen Laboratories Ltd (MLL) share is gradually coming out from its hibernation mode and is getting set to see great heights once again. MLL’s state-of-art manufacturing facility at Baddi comprises a scientifically integrated complex of 10 plants, each with a specific product profile. The Company’s extensive R&D facilities and factories are manned by a dedicated team of PRESS RELEASE STOCK SCAN A Time Communications Publication 19 professionals who ensure stringent quality standards. Today, MLL exports its products to several countries across the world. Busy lifestyles and increasing work pressures have made it imperative to make self-monitoring diagnostic equipment, a part of every household. MLL has tied up with international majors in this segment and has brought to India, a range of products that help people monitor their health on a day-today basis thereby seeking remedies well in time. MLL’s brand ‘Dr. Morepen’ has a strong presence in the Wellness industry, with popular Over-the-Counter (OTC) products such as Burnol, Lemolate, Sat Isabgol, etc. Dr. Morepen’s self-health FMHG (Fast Moving Health Goods) product portfolio includes Burnol (for burns and cuts), Lemolate Gold (for Cold Relief), Fibre-X Sat-Isabgol (Natural Laxative), Fever-X (Fever Reducer), Option72 (Emergency contraceptive), Dabgel (Antacid), MoreVital+ (Dietary Supplement), Exygra (Sildenafil Citrate), QuickChek (Pregnancy Card), among others. These products are marketed to over 2 lakh retail outlets through a vast marketing and sales network. MLL’s consumer care division has successfully introduced products such as DAB (an Antacid with fruit flavours - a new product in the gastro category), Sugar care (a low calorie Sweetener), Garlitone (garlic tablets), Mintina (peppermint tablets) and Slim Well (weight reducing agents). MLL was incorporated as a private limited company in 1984 and was converted into a public limited company in 1992 and it hit the capital markets in 1993. The Company manufactures CIMC chloride, 7-ADCA acid Cephalexi Monohydrate, formulations etc. Its bulk drug manufacturing unit manufactures life-saving drugs such as Ampicillia Trihydrate and Cloxacillin Sodium. In 1995, MLL introduced two new molecules (Cisapride and Loratadine) in bulk and formulation forms. In 1996, the Company tied up with the US-based Stryker Corporation for marketing its medical equipment in India. In 1998, MLL entered into contracts with reputed European generic companies to export bulk drugs. It also expanded its marketing network for exports to newer markets. It entered the US markets with the filing of drug master file (DMF) with the USFDA which was duly acknowledged. The Company also established facilities for herbal research and development at Gurgaon (Harayana) under its technology support services program, with financial assistance from ICICI. In 1999, MLL signed an agreement with PARI GmbH, Germany for marketing its inhalation systems for respiratory diseases in India, thereby becoming the youngest Indian company to obtain USFDA approval. MLL currently has an installed capacity of over 6 tons p.a. and going forward, over 50% of the Company's revenue is expected to be generated from this product alone. The Company's manufacturing facilities at Parwanoo (Himachal Pradesh) for Loratadine obtained the USFDA approval in 2000. Loratadine became the fifth largest selling drug in the world with over 50% market share among all antihistamines and its production capacity was doubled to 24 tons p.a. MLL is all set to introduce vitamin products in its consumer care product segment for pregnant women - Zimvit-P (to provide the necessary vitamin support to pregnant women) and Zimvit-L (to support post-pregnancy vitamin requirements). The Company has recently launched Atorvastatin and Fluvastatin (both cholesterol reducers), Paroxetin (antidepressant), Losartan (anti-hypertensive), Zafirlukast and Montelukast (both anti-asthmatic). New products lined up in its OTC segment include hospital foods, health water, Cold-N-Fever tablets, Vitamin-C tablets and three variants of DAB. MLL has entered into a joint venture agreement with a US-based company for carrying out Research and Development (R&D) activities in medicinal biotechnology. It has also tied up with 5 leading generic companies in Canada- Apotex, Novex Pharma, Genpharm, Novopharm and Technilab for supplying non-sedative antihistamine and loratadine. In 2001, MLL formed a technology-cum-marketing joint venture with a multi-million Company, DiaMed AG. The launch of the Optimal Rapid Malaria Test Kit – a product from DiaMed AG, leading in blood group serology added more credibility to MLL’s reputation. The Company also entered into a strategic manufacturing joint venture with the USbased Ameritek Inc, a global player in rapid diagnostic test kits, followed by a marketing alliance with Beurer GmbH & Co to sell a range of diagnostic and therapeutic monitoring systems to monitor health at home. In 2002, MLL entered into a joint venture with the Apollo Hospitals Group for providing emergency services and subsequently acquired Lifespring, a chain of health and beauty stores, for Rs.12 crore from Total Care Pvt Ltd. It also acquired Lemolate, a premium brand of Yash Pharma Laboratories Ltd in the cough and cold category. Additionally, it also tied up with an Italian Diagnostic company, A Menarini, to market its gluco-meter range in India and also with Analyticon to market its urine analysis reagent strips.
In 2004, MLL bagged the international patent of a new crystalline form (VI) of Atorvastatin, a cholesterol-lowering drug. It also obtained the USFDA approval for its Active Pharmaceutical Ingredient (API) manufacturing facilities at Masulkhana (Himachal Pradesh). In 2005, MLL entered the anti-diabetics market of the US with its insulin sensitizer-Pioglitazone Hydrochloride (Actos). It bagged the international patent for its cholesterol drug and also joined the Lipitor Club in the US. The Company has announced 52 DMF filings for 6 products across 10 European countries. Financial Parameters: For FY 2015, MLL reported total revenue of Rs.370.26 crore with profit from operations of Rs.9.36 crore. Its finance cost dragged its net profit to Rs.2.14 crore. The Company posted excellent Q1FY16 results with sales at Rs.99.28 crore and net profit at Rs.2.5 crore, fetching an EPS of Rs.0.05 (after deducting a tax of Rs.0.6 crore and interest of Rs.1.81 crore as against Rs.2.04 in Q1FY15). This indicates that the Company is probably managing its debtor days more efficiently thereby reducing the working capital requirement of the Company. If this trend continues, MLL’s operating margins will improve and its bottom line may beat its estimates. Projections for FY16: MLL has launched a few profitable products this year, the benefits of which will be reaped in the coming quarters. The Company has already turned around and is expected to show improved performances in the next few quarters. Its share is currently trading at Rs.16.69 and has the potential to zoom to Rs.40 within a year. Its all-time high is Rs.640 (pre-split) and Rs.128 (ex-split). Markets have always rewarded turnaround companies. Marksans pharma bounced back from Rs.2 to Rs.125 in less than 2 yrs. Mangalam Drugs and Organics jumped from Rs.8 to Rs.180 and Caplin Point from Rs.15 to Rs.1500. Can Morepen Laboratories lag behind? In fact, MLL has to its credit, some of the most valuable brands and products and is a promising company. Shareholding pattern: The promoters hold 34.54% of the equity capital, FIIs hold 10.87%, and DIIs hold 6.43%, leaving the balance 48.16% stake with the investing public. The market cap of the company at its CMP of Rs.16.69 is Rs.591.66 crore and with a book value of Rs.4.3, its P/BV works out to just 3.9. The share’s deliverable quantities lie between 46-50%. A company with a solid brand name and sounds financials, that exports to over 45 countries and promotes pharmaceutical products of international standards to generic markets, and produces innovative health products with a commitment to quality and service, certainly deserves a much better valuation.
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