Glenmark Pharmaceuticals
Business Model
Forge partnerships and sell licensed drugs.
Focus on Respiratory, Derma and Onco products. Respiratory and Onco division started lately
hence the revenues are lower.
Company’s global focus is on Respiratory and Onco Products & a few Derma products. Newer
product launches are also focused on Respiratory & Onco.
Approx 8% of total revenues are spent on ICHNOS. Total R&D is 13% of revenues.
Question – What is the nature of licensing deal? Can the company from which we have in-licensed the
product cancel the license? If yes, that can be a big loss. Eg- Glenmark spends time and effort to build
the brand and the licensee just cancels the license or tries to arm-twist.
US Business (Formulations)
Company’s revenue has plateaued and not growing from last 3 years. $443.69M in FY20, $498M
in FY19 , $450M in FY18
14 ANDA approvals but only 8 filed throughout the year. Pipeline looks very less for Glenmark.
Only 1 filed in Q4FY20 and 5 expected to be filed in Q1FY21. (Company was planning to file 5 in
Q4FY20).
3 key products like Mupirocin, atomoxetine and calcipotriene cream have consistently lost
market share and have undergone price erosion. Mupirocin used to give $75M dollar
revenues a year now it gives less than $25M. This loss is due to therapy changes and
competition. The effect will remain till Q1 FY21 and partly in Q2FY21 and then base
effect will go away.
Other products launch tries to cover the revenue loss however it hasn’t been able to completely
cover the revenue loss.
They have launched products like Hydrocortisone Valerate Oint (180 day exclusivity but market
is less than $30M), Colesevelam HCl susp ( High Value but too much competition), Estradiol
Vaginal insert (very high comp.), Azelaic Acid, Sevelamar, Tacrolimus Oint, Pimecrolimus
Ranolzine ER, Fulvestrant ( big market but a lot of competition), Deferasirox Tab, Adapelene &
Benzoyl Peroxide, Glumetza, Solifenacin Succinate etc.
The company doesn’t release new product launches in Pipeline.
New Monroe Facility in US is for inhalation and injectatbles. Lupin CFO says that inhalation is the
fastest growing therapy in US. Company plans to file 6-7 products every year from this facility
along with site transfer of some existing ANDA’s approved or tentatively approved.
New ANDA filings have dried up. Management has now said they want to file just 10-15 ANDA’s
every year and expect similar number of approvals every year.
The company has consistently gained market share in Naproxen, Mupirocin, Omeprazole,
Olmesartan, Verapamil ER and Clobetasol propionate.
We will have to trust the management to do the right thing.
Management always guided for 10-15% growth however it has not happened. I guess they
always over promise and under deliver or maybe US business is unpredictable.
In 2017, company signed an agreement with Cyndea Pharma for developing generic soft gelatin
formulations of certain pharma products. Under this agreement, Glenmark receives exclusive
rights to the US and Canada markets for these soft-gelatin formulations in exchange for sharing
development costs and profits from future sales. In addition, the agreement provides for the
companies to add further soft-gelatin product candidates for dev. and commercialisation, as
new branded, soft-gelatin, capsule-based drug products become available in the marketplace.
Agreement with Sam Chung Dang Pharma to commercialize 6 ANDA’s for ophthalmic products.
Read that there wasn’t much traction received for these products.
Figure 1 USA Revenue Growth
Figure 2 USFDA ANDA Filings - Pending & Authorized
Figure 3 Products having for than 10% Market Share in US
Europe (Formulations)
FY19 revenues were $160Mn (1121 Cr.) on the back of licensing of Generic Seretide Accuhaler
and Titropium Bromide dry powder. FY20 revenues were $176.4Mn (1248 Cr.).
The company is heavily focused on Inhalation products. They have also obtained approvals for a
few respiratory products in DPI (Dry Powder Inhalation) & MDI (Metered Dose Inhaler,
Aerosoles). Still to figure out the products.
Company spends yearly 120-150 Cr. In licensing deals in Europe.
Management mentioned that this biz is EBIDTA positive however this might imply that they are
not making EBIT profits from Europe. Also we need to keep in mind that Amortisation of License
is not a book entry but a real spend.
In Central and Easter Europe, 40% of revenues are from OTC products. They are supposed to be
high margin because main products are sold on tender basis.
Figure 4 Europe Formulations Groth
LATAM (Formulations)
In-Licensed 3 key products from Novartis for Brazilian subsidiary. They are doing well from
revenue point of view. The products are in respiratory division.
The sales have grown 28% from FY19, 418 cr. to FY20, 536 cr.
Company doesn’t disclose the profitability of that division. We may need to dig in deeper.
Momate cream is driving revenues for non-licensed part. However, licensed part is now big part
of the revenues.
Figure 5 LATAM Formulations Growth
ROW
FY20 vs FY19 ROW revenues were flattish 1285 v/s 1276 crore
SA and Kenya has grown in excess of 30% for 9M. The company has launched 56 products in
those markets.
Asia growth has been muted by just 1%.
CIS region has grown by 4-5%. They are in top 15 in Derma segment in Russia and closer to 40
overall.
Management has consistently reiterated that the company can grow at 15% CAGR. However the
company hasn’t been able to glow at this pace consistently.
Main Focus is Derma and Respiratory.
Figure 6 ROW Revenue Growth
Figure 7 R&D Expenses
India Business
FY19 vs FY20 India business grew from 2777 cr to 3202 cr. with growth of 15.31%.
OTC segment grew from 190 cr to 203 cr. Will have to check if Q4FY20 numbers include VWASH
because all other segments grew 30% plus however overall growth is muted. (Need to ask
Management).
Remogliflozin is doing 5.3 cr per month and Remo + Metformin doing 1 Cr. per month.
How was the growth for Nourkin , AKYNEZO, Nebzmart G, Bye Ilergy and Other new products?
Respiratory mkt share 4.8 to 5.1. Cardiac 4.5 to 4.7. Derma – 9.1 to 8.9. Diabetes – 1.61 to 1.78
Q - What drove this growth in India business? Question to answer is that how much of the
growth is due to in-licensed products and how much is from own stable.
Q - Margin profile for India business and especially in-licensed products.
Q – Why company is losing market share in Derma? Have we lost focus there?
Figure 8 India Revenue Growth
Figure 9 India Market Share Growth
Figure 10 Market Rank of Glenmark
Figure 11 Market Share in Key Therapies
Note - Mr Robert Crockart is the new Glenmark Formulations Head.
API (Glenmark Life Sciences)
FY19 vs FY20 revenues grew from 949.3 to 1023.9 registering growth of 7.86%.
US and EM grew above 30% this year and UK and Japan were quiet. Management was bullish
from Japan in previous conference calls.
Company filed 2 DMFs in Q4FY20
Key molecules are Olmesartan, Etoricoxib, Perindopril, Aprepitant (Lead growth in FY20),
Amiodarone, Atovaquone , Lercanidipine (Google shows that each molecule has many
manufacturers)
Top 10 molecules contribute 60% of the revenues.
Company can produce 135 different molecules.
103 USDMF’s as of FY18. 1 DMF filed in Q1FY20 (Atomoxetine), 2 DMF in Q4FY20
As per management, EBITDA margin in the range of 30%.
Figure 12 API Business Growth
ICHNOS
820 cr spent on R&D in FY20.
Now only 4 products are in trial stage.
ISB 830 Phase 2B Part 2 results are expected in 1HCY21. It got delayed due to Coronavirus.
Dr. Alessandro Riva is the MD and the entire management team consists of Ex-Novartis &
ABBvie researchers specializing in Onco & Cell Therapy. Hopefully we may start to see results.
So if in future Glenmark closes this division or sells it off, we are looking for some 820 cr delta in
EBIDTA.
Note – Still CRL not replied back to USFDA for RYALTRIS
Ex-Employee Feedback
Company is probably one of the best Pharma Company to for work for in India. It is very
generous in salary raises and targets are clearly defined for bonuses.
HR department is so humble that one of the HR visited his house to congratulate his parents for
the work the employee had done.
Company takes star performing employees for conferences in foreign destinations which keep
employees motivated.
Company has R&D in its DNA even if they have got a few setbacks recently in NCE biz.
Sources
For API manufacturers
https://pharmaoffer.com/api-excipient-supplier/atomoxetine
ANDA Database
https://www.accessdata.fda.gov/scripts/cder/daf/
Annual Reports, Conference Calls and Brokerage Reports
