Let us see what the management has said about Mangalore from time to time.
As early as in the DRHP filed by Syngene in April 2015, Mangalore was mentioned. “We are in the process of setting up a manufacturing facility in Mangaluru to manufacture novel small molecules for companies in pharmaceutical, agrochemical and other industrial sectors”.
The FY16 Annual Report goes into the details about this – “We will invest USD 100 mn in the upcoming commercial scale manufacturing facility taking shape at Mangalore. This facility is spread across 40 acres in the Mangalore SEZ. It will manufacture Active Pharmaceutical Ingredients and Intermediates (API); non-pharma novel molecules including advanced intermediates, agro chemicals and performance / speciality chemicals meant for supplies in various scales. The API facility will be designed to develop processes for pre-clinical, clinical and commercial launch scale material. Other capabilities will include scale-up of the product from lab to pilot and commercial manufacturing. The facility will meet national and international regulations and shall be built as per cGMP and other appropriate regulatory guidelines. We are currently in the process of obtaining necessary permits and regulatory approvals to commence building and this facility is expected to be operational by FY19”’
So the facility was expected to be “operational” by FY19 – i.e. after 3 years. In reality, the facility became operational a year late in end FY20 (that’s ok) but then the management said “facility is ready but regulatory validation and qualification will take time”:
See July 2020 concall – “The real priority for the year is, having now completed the building stage … is now to complete the qualification. So, the order of the hour through the rest of this year is qualifying the plant and then also starting to win those sorts of regulatory inspections and approvals”.
This “qualification” consumed another year. But then they said qualification is done but regulatory approval is not !
Annual Report FY21 – “Towards the end of the financial year, we completed the qualification activities for our API manufacturing plant at Mangalore and the facility has been awarded GMP certification by the Indian regulatory authority. The focus is now on gaining other key regulatory approvals over the next two years”.
Whoa! Wait for regulatory approval which takes another two years. Why couldn’t all this be done faster? It’s already 5 years since work on Mangalore started…
This was answered in July 2021 concall – “You can’t trigger that until you’ve got a product. We’re signalling to you now that we’ve got at least one program in place that, will take us up to 24-months to complete and by then we’ll be at the point where the regulators would want to come and inspect it”.
This “trigger” event is now expected by end - FY24.
Annual Report FY22 – “The Company has small molecule commercial manufacturing facility in Mangalore. The Company remains focused on securing USFDA and other major regulatory approvals for the facility. The approval is expected in FY24”.
And after that also, there will only be a gradual scale up which will take at least 3 – 4 years to achieve full revenue levels.
One can count how many years this is from April 2015 when the company first spoke about Mangalore. Market seems to have been “pricing in” Mangalore since eternity. I totally agree with what @ankush12495 has said in his Twitter thread. The reader can decide for himself if this is simply investors’ ignorance of how this industry works, or the company is guilty of selective & limited disclosures, letting the misunderstanding persist. Draw your own conclusions.
(Disc.: No positions.)