Jubilant Pharmova to get its US generics business back to profitability through these measures

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Jubilant Pharmova Ltd., has decided to shut operations of its subsidiary Jubilant Cadista Pharmaceuticals Inc., USA, due to mounting losses. The unit is likely to cease manufacturing operations on June 17, 2024, it said in an exchange filing.

The subsidiary is involved in the manufacturing of tablets and capsules for the US market and has the capacity to serve 1.5 billion doses. Jubilant Pharmova attributed the decision to significant pricing pressure in the US generics market, that led to losses at Jubilant Cadista since financial year 2022. The company did not disclose the quantum of the losses.

However, Jubilant Cadista will continue the sales and marketing operations for the US market. The subsidiary will continue to explore various options to utilise or sell the facility’s land, building, plant and machinery in due course of time.

Jubilant Pharmova has now decided to change the operating model from in-house manufacturing to outsourced manufacturing by selected USFDA-approved Contract Manufacturing Organisations (CMOs) for the US market to get the US generics business back to profitability.

On Wednesday, Jubilant Pharmova’s wholly-owned subsidiary Jubilant Pharma Ltd. said that its subsidiary Jubilant Generics Ltd. (JGL) received a communication from the US drug regulator, which determined the inspection classification of its Roorkee facility as “Voluntary Action Indicated” (VAI).

Based on this classification, the facility is considered to be in “acceptable state of compliance” with regard to current Good Manufacturing Practices (cGMP). The regulator also concluded the inspection as “closed.”

Following this change in status for the Roorkee facility, the company expects exports from this unit to the US market to increase in a meaningful and gradual manner. Currently, the facility exports only one product, Risperidone, to the US market.

“These actions are expected to improve the gross margins of the generics business by reducing manufacturing, quality management and overhead costs, which will drive the generics business towards profitability,” Jubilant Pharmova’s statement state. The generics business also has plans to scale up revenues in the US markets by launching new products.

Shares of Jubilant Pharmova had ended 3.3% higher on Tuesday at ₹672.4. The stock has risen 112% over the last 12 months.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow