Glenmark’s revenue in Q2FY19 grew 14.4% yoy to Rs2,581.3cr. EBITDA grew by 13.3% yoy to Rs440.1cr in Q2FY19 vs. Rs388.4cr in Q2FY18. EBITDA margins stood at 17.1% in Q2FY19 vs. 17.2% in Q2FY18 and 16% in Q1FY19. Reported PAT grew by 93.3% yoy to Rs414cr in Q2FY19 vs. Rs214.1cr in Q2FY18. During the quarter, company has reported one time net exceptional gain of Rs167.2cr on account of divestment of its Orthopaedic and Pain management India business. Adjusted for this, PAT grew by 15.3% yoy to Rs246.8cr. We had expected revenue/EBITDA/PAT of Rs2,481.5cr/Rs417.9cr/Rs213.4cr, hence the result is above our expectations.
India Business grew by 9.5% yoy to Rs778.4cr. India business strengthened during Q2FY19 with improvement in the market share of cardiac, respiratory and anti-diabetic segments.
US Business grew by 11.4% to Rs810.2cr. The US business growth was driven by launch of certain limited competition generic products. Company has said that the overall market environment remains challenging.
During Q2FY19, Glenmark launched Colesevelam HCL (oral Suspension) and Estradiol Vaginal Inserts. Europe and ROW businesses grew by 30.4% and 21% yoy respectively to Rs260.8cr and 305.1cr.
Glenmark has also inaugurated its first US manufacturing facility in Monroe, North Carolina, which will soon be commercialized.
The European business witnessed strong growth due to launch of generic Seretide in Nordic countries and other new product launches across the region.
API Business grew by 6.2% to 251.3cr.
US formulations revenue in Q2FY19 was at $116mn vs. $113.2mn in Q2FY18.
European revenue was at $37.4mn in Q2FY19 in Q2FY19 vs. $31.1mn in Q2FY18.
Latin America revenue was at $14.1mn in Q2FY19 vs. $16.3mn in Q2FY18.
ROW revenue was at $43.8mn in Q2FY19 vs. $39.2mn in Q2FY18
Competitive intensity on complex generics has increased, and hence, company has discontinued development of four in-licensed complex generics i.e. gAbraxane, gNuvaring, gConcerta and gSuboxone.
The PDUFA target action date (TAD) on Ryaltris is March 21, 2019.
Company targets to file/initiate the Phase-3 study for Xolair biosimilar (GBR 310) in H1FY20E.
Advair generic development has continued but competitive environment has become difficult.
Company is focussing to be among the first wave approvals in the US than entering in the crowded market and expects to launch ~12 ANDAs next year.
European growth will continue to remain strong despite facing a product related injunction in the Germany.
India business can grow at 15% rate over the next 2-3 years owing to new launches and in-licensing deals and OTC business. India growth will be strong in FY20E due to the two sizable launches.
India OTC business currently has Rs200cr/year revenue and it is growing by ~25%/year, margins are in mid-teens, which will improve going ahead.
Glenmark has received Rs600cr from orthopaedic business, net gains are Rs350cr. Company is now looking to bring a minority shareholder in its API business by selling some of parent’s stake in that business.
Capex in H1FY19 was Rs310cr, full year capex is likely to be ~Rs700cr. Company expects to spend ~12% of the revenue on R&D for next few years.
Company’s margins are expected to improve due to higher scale and rupee depreciation.
Gross debt in Q2FY19 was at Rs4,870cr vs. Rs4,639cr in Q4FY18, net debt was at Rs3,491cr in Q2FY19 vs Rs3,404cr in Q4FY18.
In Q2FY19, company booked Rs125cr forex gains and out-licensing income of Rs40cr.
All facilities are compliant with EIR received from USFDA.
Glenmark Pharmaceuticals Ltd ended at Rs. 688, up by 12.1 points or 1.79% from its previous closing of Rs. 675.90 on the BSE.
The scrip opened at Rs. 688 and touched a high and low of Rs. 688 and Rs. 688 respectively. A total of 12,808 (NSE+BSE) shares were traded on the counter. The stock traded below its 50 DMA.
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