The potential of the contract manufacturing market is estimated to be Rs 10,000 crore. The company is entering into the segment of generic manufacturing and has identified at least 20 non-patent high-volume generic products and the process could begin within the next few months. According to the company's chairman, KB Suri, the company will soon be tying up with top generic companies on a one-to-one basis and the company is keeping track of recent patent expiration and is getting ready for forthcoming products.Suri told that the company will be spending close to Rs 30 crore to take up contract manufacturing. The company's existing capacities will be sufficient to take care of its additional demand in the first three years.

This would improve the company's exports substantially and by expects to achieve a turnover of close to Rs 50 crore in 2000-2001. The turnover is expected to increase further to around Rs 150 crore by 2003-4. The process of contract manufacturing involves taking up the manufacturing of products which are off-patent for overseas companies. A number of European companies are already involved in contract manufacturing and are meeting their capacity requirement from overseas companies.

"Morepen's existing FDA approved facilities and documentation would help get new contract manufacturing orders and the company is keeping track of recent patent expiry and is getting ready for the forthcoming opportunities", said Suri. The foray into contract manufacturing part of the company's Rs 200 crore expansion plan.

Another 20 per cent of the project cost or Rs 40 crore is proposed to be invested by Morepen in its forthcoming molecules like the cholestrol reducer `Atorvastalin', anti-depressant `paroxetine', anti-hypertensitive `Losarrtan', anti-asthmatic `Zafiirlukast' and `Montelukast' and another cholestrol-reducer `Fluvastalin'.

Morepen is investing another Rs 16 crore in formulations, Rs 10 crore towards developing over the counter (OTC) products and another Rs 30 crore towards research and development. The company has plans to retire its high cost debt to the tune of Rs 80 crore.

To meet the fund requirement, the company is planning a private placement of share of close to 25 lakh shares. Suri expects to place the shares at a 25-30 per cent premium to the then prevailing market price. The company at its recently held extraordinary meeting took approval from shareholders to issue 25 lakh shares to foreign companies/foreign institutional investors. The company is more keen to privately place the equity to a strategic partner, rather than offering equity to a FII or a fund.

Morepen Laboratories is already in talks with a number of companies for entering into strategic alliances with foreign pharmaceutical companies to introduce medicinal over the counter products in India. The tie-ups will be in the form of exclusive marketing rights to Morepen for the OTC products. Also on the anvil is the launch company's own cough and cold formulations and artificial sweeteners in the OTC segment. The company is aiming at the branded formulations and OTC drugs sector to take advantage of the patent regime that will come into effect from 2005.

Morepen is expanding production capacity of the DAB antacid plant in Himachal Pradesh. DAB's production capacity was being increased 16 folds over the next six months in view of the good market response.