The stock of >Indoco Remedies jumped around 20 per cent in trade on Tuesday after US drug regulator – Food and Drug Administration approved its solid dosage (plant III) and sterile manufacturing facility (plant II) in Verna, Goa. This will accentuate the pace of approvals for the sterile products filed from this facility thereby boosting its US revenues.

Indoco Remedies has an alliance with the Ireland headquartered pharma major Actavis (erstwhile Watson) to jointly develop and manufacture 23 sterile products (ophthalmic) for the US market. In addition to milestone payments and manufacturing margins, Indoco is also entitled to a share of the profits made from selling these products.

The ophthalmic products are to be manufactured from the facility in Verna.

Two of these products, which were slated for launch last fiscal, were delayed after the US FDA observed several issues during its inspection of the plant in August 2013.

Satisfied with the corrective measures taken by the company, the US FDA has now granted clearance to this facility. This will now pave the way for approval and launch of five products (two pending since last year and three more this year) with a market size of about $600 million. Given the healthy margins in the ophthalmic products, timely approvals and subsequent ramp up in revenues can drive up the company’s overall operating margin beginning 2015-16.

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