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New products from Glaxo India - Views on News from Equitymaster
 
 
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  • Feb 5, 2000

    New products from Glaxo India

    Glaxo India is to launch eight new products of which seven are to be launched in the current year itself. Latronex (a gastro–intestinal product for the treatment of irritable bowel syndrome) is to be launched next year after its global launch in the current year.

    Glaxo India is a 51% subsidiary of the £ 8 billion Glaxo Plc. UK which has blockbusters like Zantac and Zovirax to its credit. It has two other group companies Burroughs Wellcome India and Biddle Sawyer.

    The implication of the news on Glaxo’s profitability is two fold. First of all since new products are in the fast moving high margin areas of gastro–intestinals, dermatology and asthma this would improve the company’s profitability. Glaxo’s current portfolio comprises quite a few products in highly competitive antibiotics market such as cephalosporins, anti-infectives and anti-bacterials as well as the ranitidine based Zinetac (Zantac worldwide).

    Secondly, since the new products are exempt from the purview of the Drug Price Control Order (DPCO) this would also go a long way in improving the profitability of the company over the medium term. At present almost 60% of the turnover of the company accrues from products under price control.

    Market View:
    Most analysts have rated Glaxo as a buy for three reasons. Firstly, on account of the parent’s product pipeline post its merger with Smithkline. Second the fact that Glaxo India has not followed minority shareholder unfriendly policies such as setting up a 100% subsidiary or payment of hefty royalties to the parent. And third the company has substantial cash in its balance sheet that can be used for future acquisition as the Indian pharmaceutical sector witnesses a consolidation.

     

     

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