Shares of Jubilant Pharmova Limited (JPL) increased by 8% today, as the company announced that its subsidiary, Jubilant Cadista Pharmaceuticals Inc., will be closing down its manufacturing operations at its solid dosage formulation facility in Salisbury, Maryland, USA. This is as per the company’s regulatory filing on April 18.

This decision has been made due to significant pricing pressure in the US Generics market, which has caused significant losses for Jubilant Cadista since the financial year 2022 onwards. The expected date of cessation of manufacturing operation and first separations at the facility will be on June 17, 2024.

However, Jubilant Cadista will still continue its sales and marketing operations for the US market. The facility manufactures tablets and capsules for the US market and can serve 1.5 billion doses.

To move the US Generics business to profitability, Jubilant Cadista has decided to outsource its manufacturing operations to selected US FDA-approved CMOs for the US market. 

This change in the operating model expects 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.

The company expects the exports from Jubilant Generics Limited’s (JGL) Roorkee facility to increase in a meaningful and gradual manner following the status change of the facility by USFDA to VAI.

Jubilant Cadista will also explore various options to utilize or sell the facility’s Land, Building and Plant & Machinery in the due course.

Further, in its regulatory filing of April 17, Jubilant Pharmova Limited also announced that the company’s arm received a ‘voluntary action indicated’ (VAI) status from the US Food and Drug Administration (US FDA).

Following the status change of Jubilant Generics Limited (JGL) Roorkee facility, the company expects the exports from the Roorkee facility to the US market to increase in a meaningful and gradual manner. JGL is a subsidiary of Jubilant Pharma Ltd, a wholly-owned subsidiary of the company.

As of now, the facility is exporting only one product, Risperidone to the US market. The Generics business has plans to scale up revenues in the US market through the launch of new products.

At 3:30 pm, the shares of JPL closed 5.21% higher at Rs 706.80 on NSE.