Glenmark expects 10-12% sales growth in FY22, anticipates value unlock of its RD business


Sale of anti-COVID drug Fabiflu and other products fire Q1 revenues; the company spends little over $ 100 million annually on innovation R&D business, bigger than most of its peers, developing a potential pipeline of drug assets

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Glenmark Pharmaceuticals on May 31 said it expects overall sales to grow more than 10-12 percent in FY22.

The company has guided to maintain Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) margins at 19-20 percent levels in FY22.

“We are expecting a strong year ahead of us,” said Glenn Saldanha, Chairman and MD of Glenmark Pharmaceuticals, at the company’s earnings call on Monday.

“Q1 has been strong on the back of Fabiflu sales and multiple other products,” he added.

Fabiflu, generically called Favipiravir, is an antiviral drug used in treatment of mild to moderate COVID-19 cases. Glenmark was the first company to launch the drug last year following clinical trials and approval by the Drugs Controller General of India (DCGI) approval.

Glenmark also expects its US sales to grow at 10 percent in FY22, led by new launches.

For the full year, the company is aiming for 8-10 launches. Most of these products are limited competition and first to file generics.

Saldanha said that the US business has turned the corner from the second half of FY21, and since then it is seeing consistent quarter-on-quarter (QoQ) growth.

The company’s derma assets in the US have seen huge price erosion in the first half, but Glenmark said the price erosion of its portfolio in the US has stabilised around 5-6 percent.

The company estimates a capex of about Rs 650 crore – Rs 700 crore, going towards setting up of manufacturing to produce injectable and inhaled formulations at its Monroe facility in North Carolina, US.

The Monroe facility is designed to manufacture a variety of fixed-dose pharmaceutical formulations.

At peak capacity, the company expects the site to produce 300 to 400 million tablets and capsules, 20 to 25 million vials and prefilled syringes, and 25 to 30 million ampoules for inhaled formulations.

Glenmark has ended FY21 with revenue from operations at Rs 10,944 crores registering a year-on-year (YoY) growth of 2.8 percent.

The net profit rose YoY 25 percent to Rs 970 crore in FY21. The EBITDA stood at 19 percent.

India formulation sales that contribute nearly one-third of the company’s transactions, grew 10 percent YoY to Rs 3,536.5 crore.

US sales that constitute 28 percent of revenues, declined 2 percent YoY to Rs 3076.4 crore.

Debt reduction

On debt reduction, Saldanha said he expects the operating business to generate free cash flows of around Rs 400 crore, along with the proposed Glenmark Life Sciences initial public offering (IPO), which would help deleverage the balance sheet.

Glenmark had a net debt of Rs 3,549 crore at the end of FY21. The company was able to reduce net debt by Rs 209 crore.

Glenmark has one of the highest outgoes on research and development (R&D) compared to its peers, thanks to its drug discovery programme.

The company had 9.7 percent lower R&D expenses at Rs 1,211 crore (11.2 percent of sales) in FY21 as compared to Rs 1,352 crore in FY20 (12.7 percent of sales).

Unlocking R&D business

Saldanha said the company is exploring in-licensing opportunities and plans to raise capital through sale of stakes of its R&D innovation business in FY22.

In 2019, it had spun-off its innovation R&D business under a new company called Ichnos Sciences, with the aim to explore divestment of innovation subsidiaries or licensing out its pipeline under development.

Glenmark spends little over $ 100 million annually on innovation R&D business developing a potential pipeline of drug assets based on bi-specific antibody platforms targeting multiple myeloma or a type of blood cancers.

The company plans to de-risk the R&D business through in-licensing molecules that will not just earn upfront cash but also reduce the R&D outgo.

The company is banking on two candidates, ISB 1342 and ISB 1442, for licensing opportunities. It expects Phase-1 clinical trial data read out of ISB 1342 this year and plans to begin human trials of ISB 1442.

Ichnos Sciences saw a major leadership change, with the CEO Alessandro Riva, announcing his decision to step down. Riva had come from US drug major Gilead Sciences.

Glenmark named Cyril Konto, as interim CEO. Konto, who joined Glenmark as Chief Medical Officer (CMO) in April 2021, is an oncologist by training with expertise in clinical trials and regulatory affairs.

He has previously worked with Allogene Therapeutics (Pfizer spinoff) and Bristol Myers Squibb.