Glenmark Pharma Looks To Double Revenue Growth Over Next Four Years

Glenmark Pharmaceuticals Ltd. is looking to double its revenue growth in the next four years.

To maximise shareholders’ wealth, the company aims to attain zero net debt and earn a 22% return on capital employed in the next four to five years amid a continuous improvement in Ebitda margin, it said in its exchange filing.

The pharmaceutical company intends to accomplish this by increasing its share of the branded generics business, controlling R&D spending, and improving operating leverage, according to a Nov. 17 investor meeting.

The Mumbai-based drugmaker is also evaluating enhancing dividend pay-outs and share buybacks over the next four years. Despite this, share prices declined a day after the announcement.

Shares of the company declined 3.95% to Rs 412.35 apiece as of 12:40 p.m., while the benchmark Nifty 50 eased 0.54% on the NSE. It had hit an intraday low of Rs 408.50 apiece, a day after the investors’ meeting.

The brokerage maintained a ‘neutral’ ratings, with a target price of Rs 420 apiece, implying a downside of 2%.

ROCE Boost

• Aims to boost ROCE (EBIT/capital employed) to 22% by FY27 from 17% in FY22.

• This will be done by increasing the share of business from branded generics, keeping R&D costs for the new chemical entity portfolio under control, and improving operating leverage.

• Focusing on core therapies like dermatology, respiratory, cardiac, and anti-diabetes will help improve existing brand franchises.

• 4-5% of growth in domestic formulation to be led by launches.

• To further monetise the brands, the company is working to transition from prescription generics to over-the-counter products.

• The company expects 6% annualised sales over FY22-24.

Filings update

• The benefit from complex product filings is expected from FY25 but is subject to timely approval.

• Glenmark Pharma has 46 ANDAs that are waiting to be approved. It is also working on eight to 10 injectables, two to three drug-device combinations, and three to four generics for the respiratory portfolio.

• The near-term target is to complete the proof-of-concept study for ISB1342 and ISB1442 before March 2023. The successful clinical trials will enable it to launch in CY26 and CY27, respectively.

• It also intends to close one oncology partnership before the end of FY23.

• It plans to file an investigational new drug for ISB2001 before March 2023.

Update on regulatory issues

• Asset utilisation at Monroe for the US market is subject to the successful resolution of regulatory issues, which are under ‘official action initiated’ status.

• Injectable commercialisation is hinged on successful compliance at Monroe.

• There is also an import alert issued to its Baddi facility by the U.S. FDA.

Other highlights

• The management aims to attain zero net debt by FY26.

• It intends to achieve 10-12% annualised sales growth over the next four years.

• Reduce R&D spends to 8.5-9% of sales from FY24 versus 10.4% in H1FY23.

• Aims to scale up revenue from Ryaltris [nasal spray] to $100-150 million [around Rs 817-1,226 crore] by FY27 from $30 million [Rs 245 crore] in FY22.

• The company expects to maximise business prospects in Europe through an in-house pipeline as well as strategic in-licensing, given 11% of the total revenues in the second quarter were from Europe.

• The brokerage anticipates that the European market will grow at an annualised rate of 11% between FY22 and FY24.

• Management expects the company to grow and gain market share in the rest of the world through in- and out-licensing of key product.