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Glenmark India: Emerging Strong - Views on News from Equitymaster
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  • Nov 3, 2001

    Glenmark India: Emerging Strong

    A company growing consistently above 30% for the past four years, in an industry scenario, which is finding difficult to hold a double-digit growth rate, is something commendable. Among the top 30 companies in India, Glenmark is the fastest growing pharma company, albeit on a small base.

    Above average performance of its core brand ‘Candid’, other brand acquisitions, rapid product introduction and entry into fast growing therapeutic segments has largely driven Glenmark’s growth in the domestic formulation market. From a company focused mainly in dermatology Glenmark is fast expanding its therapeutic reach.

    To strengthen its position in the dermatology and respiratory segments, Glenmark acquired three large brands of Lyka Laboratories last year. These include Alex (cough preparation), Flucort (dermatology steroid) and Sensur (pain balm). These were bought for a consideration of Rs 345 m and a 5% royalty on sales for three years. The acquisition of these brands is expected to expand the product portfolio in their respective therapeutic categories. Acquisition of Flucort brand helped the company in strengthening its presence in the dermatology sector. Glenmark is now the third largest company in dermatology segment after Glaxo and Fulford.

    Glenmark- Changing Therapeutic mix
    Particulars FY99 FY01
    Dermatology 49% 36%
    Anti-Diabetic 0 1%
    Gynaecology 5% 9%
    Internal Medicine 19% 25%
    Paediatric 21% 25%
    ENT 6% 4%

    During FY01 the company launched a new division ‘Healtheon’ to tap the fast growing anti-diabetes market. Glenmark introduced four new products through this division during FY01 and has entered into a tripartite agreement with Biobrass (the world’s third largest manufacturer of human and porcine insulin) and Ambalal Sarabhai to market insulin’s in the domestic market. Under the agreement Ambalal Sarabhai is importing insulin crystals from Biobrass to manufacture finished dosages and Glenmark is marketing the products.

    The competition in the insulin segment is limited with only four major players currently in the picture. Though anti-diabetic segment contributes just 1% of the revenues, it would a key focus area for the company going forward.

    Glenmark’s future focus going forward can be judged by the new product launches, which it has made in last six months. Out of the 9 new products launched, 5 were in the anti-diabetic segment whereas other products where in the new generation anti-infective/anti-biotic segments. Apart from this Glenmark is also focusing marketing attention towards this segment. A separate marketing force catering specifically to the anti-diabetic market has been set up, comprising an all-India sales force of 130 medical representatives.

    Anti-diabetes Segment- The new focus area
    Strategic Business
    Unit (SBU)
    % of total
    marketing strength
    Therapeutic Segments
    Glenmark 52% Dermatology, Gynaecology, Internal
    Medicine and ENT.
    Gracewell 31% Pediatric & Internal Medicine
    Healtheon 17% Anti- Diabetes

    Glenmark is also eyeing generic export opportunities for which it has formed a 100% subsidiary, Glenmark Laboratories, and has set up a new manufacturing facility at Goa as per the US FDA standards to tap generic exports to developed nations. Glenmark is expecting to get US FDA approval during CY03. It is also expecting approvals from Australian and South African authorities before that. It is also eyeing to market branded products in the developing countries for which it has got 42 product registrations across 24 countries.

  • Click here for detailed company financials

    At the current market price of Rs 156, the stock trades at an attractive valuation of 5.3x FY02 expected earnings. It seems that the company is taking all the right steps to maintain its growth trajectory in future. However, while growth in the domestic market is hard to come, the company is bit late in cashing on generic opportunity as it lacks an ANDA (Abbreviated New Drug Application) pipeline. The big generic boom is expected in 2002-05 period and players with mature ANDA filings are expected to benefit. In such a scenario the company would face stiff competition with established domestic pharma majors in all its area of operations.

    However, the company seems to be rushing to make up for being a late entrant. As a long-term strategy, company has entered into a new drug discovery (NCE) programme and has some early success too. To summarise, though the road ahead is bumpy, the company has the right plans in place.



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