Morepen Eyes Rs 250 Crore Valuation For Otc Arm

Morepen Laboratories Ltd is looking at a valuation of Rs 200-250 crore for its brand Dr Morepen. The company had recently launched lifestyle oriented over the counter (OTC) products under this brand.

"We are looking at a turnover of Rs 100 crore from OTC products in the next three years. As the valuation of a brand is two to two-and-a-half times the turnover, we are looking at a valuation between Rs 200 crore and Rs 250 crore for Dr Morepen," company chairman and managing director Sushil Suri told Business Standard.

The company made a foray into OTC products by launching three products: Dab Fizz, an antacid; Sat Isbagol, a natural laxative; and Golgoli, a digestive candy.

 

By August-end, the company plans to add a sugar replacement branded Sugar X, throat drops called 2 Kool and an energy drink with Vitamin C called C-Sip.

In September, Morepen plans to add OTC products against cough, cold and fever. The company plans to have a portfolio of 40 products soon.

To market the products, Morepen has set up a fully-owned subsidiary called Dr Morepen Ltd. "This had become necessary in view of the special HRD policies required for this business," Suri said.

Suri also said he is exploring the possibility of getting into a marketing tie-up with some overseas companies to bring their products into the country.

"To begin with, we are looking at marketing joint ventures. Through such ventures we are looking at areas like health boosters etc," he said.

Morepen is targeting the age group 18-40 for its products. While Alia Group is taking care of the communication strategy for the brand, Bates Clarion has been appointed to do the advertisements.

Within the OTC products, Suri said, almost 60 per cent of the volumes are made up of stomach-related products including digestives.

While the company is developing some of these OTC products in-house, the others are being outsourced.

Suri expects the introduction of the OTC products to help Morepen boost its topline as well as bottomline growth.

"The market for health products is growing at the rate of 40 per cent as compared to the 10-12 per cent growth in pharmaceuticals," he said.

The foray into OTC products is part of Morepen's effort to move away from bulk drugs business. At the moment, bulk drugs account for 74 per cent of the company's turnover.

By 2005-06, the contribution of bulk drugs in the turnover is projected to come down to 26 per cent, while the remaining will comprise formulations, OTC products and diagnostics.