Sushil Suri: Pioneering Growth at Morepen Laboratories
Introduction
In the dynamic landscape of healthcare and medical devices, Sushil Suri, the chairman and managing director of Morepen Laboratories, stands out as a visionary leader. Under his stewardship, the New Delhi-headquartered company has made significant strides in the medical devices sector, particularly in glucometers and blood pressure monitoring machines. As Morepen Laboratories gears up for a transformative phase, Suri’s insights and strategic decisions are set to unlock substantial value for the company and its stakeholders.
Strategic Shift: Hiving Off Medical Devices Business
Morepen Laboratories is on the brink of a strategic shift, planning to spin off its medical devices business into a separate unlisted subsidiary within the next 12 to 24 months. This decision is driven by the rapid growth of the medical devices segment, which is projected to reach a turnover of nearly Rs 500 crore. Suri emphasizes the importance of this move, stating, “Having a distinct entity helps to unlock value and also provides clarity to investors.” By creating a focused subsidiary, Morepen aims to capitalize on the burgeoning opportunities in the medical devices market, particularly in glucometers, which are essential for diabetes management.
Impressive Growth Trajectory
The growth trajectory of Morepen Laboratories is impressive. The company reported a turnover of approximately Rs 1,700 crore last year, with the medical devices segment contributing around Rs 450 crore. Suri anticipates that the medical devices business will grow at an annual rate of 25-28%, outpacing the active pharmaceutical ingredient (API) and formulations business, which is expected to grow at 15-20%. This robust growth is indicative of the increasing demand for medical devices, particularly in a country with a rising number of diabetic patients.
Market Performance and Investor Confidence
The stock performance of Morepen Laboratories reflects the market’s confidence in the company’s strategic direction. As of October 2024, the stock has surged by 61.5% year-to-date, trading at Rs 78.7 per share on the Bombay Stock Exchange (BSE). This surge is bolstered by the successful subscription of a Qualified Institutional Placement (QIP) for Rs 200 crore, which attracted bids of Rs 335 crore, indicating strong interest from marquee global investors such as Bank of America Securities Europe, Citigroup, and Morgan Stanley.
Capacity Expansion and Export Potential
A significant portion of the QIP proceeds will be allocated to capacity expansion, with Rs 75 crore earmarked for APIs and Rs 45 crore for medical devices. Morepen Laboratories plans to ramp up its production of glucometers from 2.5 million units per annum to 5 million by FY26, alongside increasing the production of test strips from 500 million to 700 million. This expansion is not only aimed at meeting domestic demand but also at tapping into export markets. Currently, Morepen exports to countries like Nepal, Bhutan, and Thailand, but with increased capacity, Suri envisions entering regulated markets such as the United States by FY27.
Innovative Research and Development Initiatives
Innovation is at the heart of Morepen’s strategy. The company is investing in research and development to create a continuous glucose monitor that will offer affordable monitoring solutions at Rs 1,000 per month, a significant reduction from the current cost of Rs 1,000 per day. This initiative aims to make diabetes management more accessible to millions of patients in India, where an estimated 100 million individuals are living with diabetes.
Market Position and Competitive Landscape
Morepen Laboratories currently holds a 30% market share in the glucometer segment, with 12 million glucometers in circulation. The company aims to sell 3 million glucometers and 450 million strips this year, up from 2.4 million glucometers and 360 million strips sold last year. With competitors like Roche also holding a significant market presence, Suri’s strategic focus on expanding production and enhancing product offerings positions Morepen favorably in a growing market.
Backward Integration for Sustainable Growth
To further strengthen its operations, Morepen is investing in backward integration. The company is transitioning to in-house manufacturing of components, such as printed circuit boards (PCBs), which are currently sourced from Korea. By collaborating with local manufacturers, Morepen aims to establish a robust supply chain within India, enhancing its operational efficiency and reducing dependency on imports.
Conclusion
Sushil Suri’s leadership at Morepen Laboratories is characterized by a forward-thinking approach that embraces growth, innovation, and strategic realignment. As the company prepares to spin off its medical devices business and expand its production capabilities, it is poised to make a significant impact in the healthcare sector. With a clear vision and a commitment to quality, Morepen Laboratories is not just keeping pace with industry trends but is actively shaping the future of medical devices in India and beyond.