Glenmark Hints At Emerging Markets Cutback Amid Strong Q3
This article was originally published in Scrip
Glenmark Pharmaceuticals Limited has reported strong growth in the third quarter ended December 2015, despite the challenges in certain emerging markets, from where it sees "diminishing" contribution to revenues here on.
Glenmark reported a 48.38% jump in net profit to INR1.70bn ($24.9m) for the third quarter ended December 2015 led by growth in its India and US businesses, while Latin America continued to be a drag on performance. Revenue for the quarter rose 4.53% to INR17.78bn.
In a post results investor call Glenmark's chairman and managing director, Glenn Saldanha, maintained that the firm was taking a "cautious approach" in emerging markets (EMs) with the primary focus continuing to be on the US, Europe and India.
"Strategically we are not investing in the EMs business, other than running the business as is. We are not putting any plants or cash investments into EMs," Saldanha said in the call on Jan. 29.
He noted that while "in-market" growth in emerging markets as a whole was not bad – growth has been in the region of 15-20% in local currency in most markets – the firm was losing out "heavily" in the currency depreciation and translation.
"EMs is now a very small percentage of total revenues and every quarter that seems to get smaller and smaller. I don't think it's going to have any significant impact on the overall operations."
Revenues from Latin American and the Caribbean operations slumped 47.23% to INR1.23bn during the quarter. Glenmark said that it had stopped supplying to its Venezuela subsidiary from November and is evaluating the situation on a "constant basis." In local currency, the subsidiaries of Brazil and Mexico grew 10% and 50% respectively for the third quarter.
The pharma industry, in general, has over the recent past calibrated supplies to Venezuela as the South American nation grapples with one of its worst economic crises, with a plunging currency and shortages of food and medicines.
Glenmark's Russia business too continued to face challenges, with weak demand conditions and currency turbulence. For the third quarter of the previous financial year the average currency for the Rouble to the dollar was 47.7 as compared with 66.1 in this current quarter.
Saldanha, though, underscored that the company continues to file new products, get these approved, have the sales force launch these products in emerging markets, but was not "actively" putting any investment as far as manufacturing or "anything else goes."
"At some of the markets we are even relooking at if we need to do anything to further improve efficiencies. EMs, for us, is a challenging place to be right now."
India, US
The formulations business in India reported revenues of INR4.88bn (+12.69%). The company recorded market share gains in the cardiac, respiratory and diabetes segments, among others, as per IMS moving annual total (MAT) data for December 2015, over the same period of the previous year.
Glenmark also reported sales in excess of INR230m for teneligliptin and its combination for the nine months ended December 2015, making it, what the firm claimed as, one of the most successful launches in India in recent years.
Saldanha said that telegliptin had compensated a "lot of the gap" that had come out of sitagliptin, but had not covered the full gap yet.
Last year, the Delhi High Court permanently enjoined Glenmark from making and selling its generic version of Merck & Co's diabetes therapies Januvia (sitagliptin) and Janumet (sitagliptin/metformin hydrochloride) and held that the Indian firm had infringed the sitagliptin patent.
The US business reported revenues of $92.58m during the quarter (+20.04%). Glenmark received final FDA approval for clotrimazole and betamethasone dipropionate cream USP, 1%|0.05% and linezolid tablets 600mg during the third quarter. As of December 2015, Glenmark's portfolio comprised 104 generic products authorized for distribution in the US. It has 63 applications pending with the FDA, of which 26 are Paragraph IV applications.
The Europe operations grew marginally during the quarter to INR1.76bn (+1.97%). The third quarter saw a number of launches in the region, driven mainly by in-licensed products.