Morepen Lab gains on plan to hive off medical devices biz into subsidiary

Morepen Laboratories rose 2.05% to Rs 57.20 after the company announced plans to carve out its point of care medical devices business into a newly incorporated wholly-owned subsidiary Morepen Devices.

In a regulatory filing on Wednesday, the company said that shareholders approved the plan on 28 September 2021 in the 36th Annual General Meeting (AGM).

The transfer of the business would happen as per terms of the business transfer agreement to be signed between both the companies.

The medical devices (POC) business has achieved a leadership position in the market. It recorded a growth of 71% in the financial year ending March 2021. In Q1 FY22, POC business recorded a growth of 187%.

Growing health concerns have pushed the average usage of diagnostics devices during last one and half year. This boosted sales revenues particularly in last two years.

"We expect the growth drivers will continue fuelling the higher consumption levels in the coming times," the company said in a statement.

The POC medical devices business is marketed under the brand Dr. Morepen. It sells devices like glucometer, blood pressure monitor and other home care products.

The company aims to strengthen further over the next 2-3 years. The hiving off of the POC business in a separate entity is a first step towards building a global brand. The new devices company will be scaling up its R&D teams.

It also plans to acquire all relevant certifications of its manufacturing facilities and products for exporting them to regulated markets in Europe and North America. It aims to become a hub for manufacturing Point of care medical devices for the Global market.

The new entity plans to deploy more resources on the R&D, backwards integration of core technologies like making enzymes/proteins.

The new company will be able to raise capital to fund its growth and make investment on innovation, research, capacity expansion and promotion of its products. The proposed segregation will give the clarity to the working teams, trade, customers and other stakeholders. The company said it expects a huge value creation for the shareholders.

On a consolidated basis, Morepen Laboratories reported 57.31% rise in net profit to Rs 30.47 crore on 50.10% rise in net sales to Rs 386.73 crore in Q1 FY22 over Q1 FY21.

Morepen Laboratories is a pharmaceutical and healthcare products company. It is a leading manufacturer of high-quality APIs, home diagnostics, formulations and OTC products in north India.

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