Glucometer maker Morepen Labs to hive off medical devices business

Expanding capacities, backward integrating production and eyeing US market for exports

New Delhi-headquartered Morepen Laboratories, makers of glucometers and blood pressure monitoring machines, is planning to hive off its medical devices business into a separate unlisted subsidiary in the next 12-24 months to unlock value.

Speaking to Business Standard, Sushil Suri, chairman and managing director, Morepen Laboratories, said that the medical devices business is growing rapidly and is touching a turnover of close to Rs 500 crore. “In the next 12-24 months, we may look at hiving this business off into a separate unlisted subsidiary. We expect the medical devices business to grow at 25-28 per cent. In comparison, the active pharmaceutical ingredient (API) and formulations business is likely to grow at 15-20 per cent. There are a lot of potential opportunities in the medical devices space, especially in glucometers,” Suri said.

Morepen Labs stock has soared 61.5 per cent year-to-date to Rs 78.7 apiece on the BSE as of Monday.

Morepen Labs posted a turnover of around Rs 1,700 crore last year, of which the medical devices business contributed around Rs 450 crore, and the API, formulations, and over-the-counter consumer health business posted around Rs 1,250 crore. Suri said that in Q1FY25, the medical devices business contributed around 30 per cent of the overall turnover, and over the next five years, it will grow to 35-40 per cent of turnover.

He felt that having a distinct entity helps to unlock value and also provides clarity to investors.

In August, Morepen Labs announced a successful subscription of a Qualified Institutional Placement (QIP) for Rs 200 crore. The issue was subscribed 1.68 times with bids of Rs 335 crore against the Rs 200 crore offering. Marquee global investors like Bank of America Securities Europe (BOFA), Samsung India, Citigroup, Société Générale, Nomura, BNP Paribas, Morgan Stanley, and Eminence are among those partnering with Morepen.

Part of the issue proceeds are to be used for capacity expansion—Rs 75 crore for APIs, and Rs 45 crore for medical devices—as well as for backward integration.

Nearly 80 per cent of the medical devices business comes from the sale of glucometers (glucose monitoring machines). The company is embarking on a massive expansion here—from 2.5 million glucometers per annum to 5 million glucometers per annum by FY26, and from 500 million strips (which are used with glucometers to give test results) per annum to 700 million strips by FY26.

Suri said that with the additional capacity, they would also focus more on export markets. “Currently, we export to countries like Nepal, Bhutan, and Thailand. But with the expanded capacity, we would also look at regulated markets like the US by FY27. Our track record with the United States Food and Drug Administration (USFDA) is good for our pharma business,” Suri said.

Further, the company also plans to invest in research and development (R&D). “We are working on developing a continuous glucose monitor that will be able to offer results at an affordable rate of Rs 1,000 per month. At the moment, these devices cost almost Rs 1,000 per day for the patient,” Suri said.

Morepen Labs has 12 million glucometers in the market, with an average sale of 150 strips per device per year. Its competitor Roche has another 10-12 million glucometers in the market, Suri claimed. Overall, there are around 35 million glucometers in circulation in the market, he said, adding that in India there are 100 million potential diabetic patients.

“This year, we aim to sell 3 million glucometers and 450 million strips, up from 2.4 million glucometers and 360 million strips sold last year,” Suri said. “We have around 30 per cent market share, and the market is expanding.”

Meanwhile, the company is also investing in backward integration. It is buying the printed circuit board (PCB) from Korea and manufacturing everything else in-house. It is also working with companies in Panchkula and one in the south to make these PCBs here in India. It is also attempting to manufacture the strips in India in partnership with a Korean company. By next financial year, Suri expects the backward integration in strips to be in advanced stages. It has 60 acres of land in Baddi, and is planning the expansion at the same location.

• Morepen Labs plans to hive off med device biz in 12-24 months
• Co feels it will unlock value for investors
• It is also backward integrating in strips for glucometers in partnership with Korean co
• It is also working with Indian cos to make PCBs here 
• Eyes regulated markets like US for med devices by FY27
• Expanding capacity to make glucometers and strips by FY26
• Only 35 mn glucometers in market; 100 mn potential diabetics in India