Glemark Accumulation

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Glenmark Pharmaceuticals

September 20, 2010 1

Contents Page No

Investment Summary 2

Background 3

Management 3

Infrastructure 4

Sector Overview 5

Business Overview 6

Novel Drugs 7

Branded Generics 8

Global Generics 9

Strategy to Consolidate Business 11

Valuation 12

Quarterly Consolidated 13

Financials 14





Investment Summary The Novel Drugs Segment has announced the discovery of a

novel molecule GRC 17536(Pain & Respiratory Disorders) and

an

out

licensing

deal

with

Sanofi

Aventis

for

GRC

15300

(Osteoarthritis Pain). ‘Crofelemer’ the anti‐diarrheal molecule in

licensed from Napo Pharmaceuticals has progressed to Phase III

trials in India & the US and is expected to be launched in FY 2012.

Glenmark has rights to market the same in 140 markets excluding

North America, Europe and Japan.

Glenmark is looking to expand its Novel Drug Pipeline thru In‐

licensing; Mergers & Acquisitions of late stage New Molecular Entities. Potential out licensing of its in‐house molecules & in

licensing of novel molecules will provide upside surprise to

projected earnings.

Having consolidated its position in the Domestic Formulations

business, Glenmark is now focusing on, taking its power brands

from the Formulations business as well as introducing new

products, across geographies in each one of its markets to focus on

attaining leadership in the select therapeutic areas of

Dermatology, Respiratory and Oncology.

The Generic Business with a portfolio of 61 products authorized

for distribution in US and 47 applications pending approval has

just launched three of the approved dosage strengths of ‘Tarka’

(FY 10 sales at US$ 58Mn per IMS Sales data), one

of

its

four

FTFs. ‘Cutivate’ & ‘Malarone’ (Two other FTF Para IV Filings with combined FY 10 sales at US$103 Mn, per IMS sales data) have

been settled and are expected to be launched in CY 2011.

Valuation: After continuous disappointments on its R &D out licensing

program, Glenmark is seeing signs of improvement in key segments

like Branded Generics (India) and niche therapy‐driven US business.

With the recovery in the base businesses, we expect the stock to achieve our target price of `375 (17x FY12), as visibility on Out licensing (Melogliptin, Tedalinab, Revamilast) ; newer In licensing

deals besides Crofelemer as well as US ANDA approvals and launches

improves .We initiate coverage, with a Buy rating.

Financial Matrix

Year to Sales PAT EPS Change P/E P/B ROCE RONW EV/EBIDTA YIELD

March (` Mn) (` Mn) (`) YOY (%) (x) (x) (%) (%) (x) (%)

2009 21457 1935 7.1 ‐69% 62.43* 6.99* 13.38 12.42 14.0* 0.09*

2010 25244 3310 12.2 71% 21.78* 3.05* 13.92 16.75 12.0* 0.14*

2011E 30654 4965 18.34 50% 15.33 2.70 16.74 19.19 11.5 0.14

2012E 36866 5886 21.74 19% 12.93 2.25 17.24 18.98 9.0 0.14

*Based on 365 day avg.adjtd.clsg.price for the fiscal

!

BUY

CMP (`) 281

Target price

( ` )

375

Potential upside 33%

Investment Period 12 ‐15mths

Stock Matrix

No. of shares 270mn

FV ( ` ) 1

B V ( ` ) 88

Market Cap (Mn ` ) 75,897

Beta 0.57

52 Wk high/low ( ` ) 304 / 210

Avg. daily vol. (Mn ` ) 44.15

BSE Code 532296

NSE Code GLENMARK

Shareholding

Pattern (%)

Mar

2010

Jun

2010

QoQ

Chg (%)

Promoters 48.37 48.35 0

DIIs 26.84 27.63 3%

FIIs 7.88 7.61 ‐3.4%

Corporate 4.27 3.91 ‐8.4%

Others 12.64 12.50 22%

Price Performance

[email protected]

:

91‐

22‐

3005

6400

‐10

‐3

4

11

18

25

32

Glenmark Sensex





Background Incorporated in 1977, by Gracias Saldanha, Glenmark was listed in 1999, with the

family holding 47.26% thru the Saldanha Family Trust. Today Glenmark is

represented

by

33

Subsidiaries

and

a

Joint

Venture,

incorporated

in

26

different

countries. Of the subsidiaries twelve are direct subsidiaries, seventeen are held thru

Glenmark Holding S A, Switzerland and five thru Glenmark Generics, India.

The standalone entity has a significant presence in the Branded Generics markets

across emerging economies including India. The India business contributes 30 % to

the overall sales of the group and operates through 12 divisions with a focus on

Dermatology, Gynaecology, Diabetology, Cardiology, Internal medicine, ENT &

Paediatrics. Its subsidiary, Glenmark Generics Limited has a fast growing business

which includes the North American Generics business, Argentina’s Oncology

business and APIs. Headquartered in Mumbai, India, the Glenmark Group employs

nearly 7000 people including a 3000 strong field‐force.

Management Glenn Saldanha, with a Bachelor’s degree in Pharmacy and an MBA from Leonard

Stern School of Business, NYU joined Glenmark in 1998 as Director, taking over as

Managing Director and CEO in 2001. He has been instrumental in transforming

Glenmark from an India formulations business in 1999 to a global firm with

interests spanning Discovery Research, Branded & Generic Formulations and APIs.

Terrance Coughlin, the President of the API and the US Generics business prior to

the restructuring exercise is now the CEO of Glenmark Generics. He has over 20

years of experience in the Generic pharmaceutical segment and has been with

Glenmark since 2004.

Over the decade Glenmark has successfully adopted the acquisition route for

expanding its Manufacturing & Marketing facilities in India and Overseas and is well

positioned to leverage the opportunities emerging across the global pharmaceutical

space.

Glenmark’s Aquisition Track

Seller Country Type Year

Lyka Labs India 3 Brands 2000

GlaxoSmithKline

India Manufacturing (API)

2002Klinger Labs Brazil Manufacturing 2004

Bouwer Bartlett South Africa Marketing 2005

Servycal S.A Argentina Marketing 2005

Medicamenta Czech Republic Marketing & Manufacturing 2007

Actavis Poland Marketing & 7 Brands 2008

Source : Company & Greshma ResearchOnce again the company has expressed its intent to explore In‐licensing, Mergers &

Acquisitions of late stage New Molecular Entities to expand its Branded Generic

Portfolio as well as its Novel Drug Pipeline.

Glenmark markets over

300 products in India of

which 40 were

launched in the last

three years.

It is

a leading

player

in

the dermatology

segment.

It is No. 1 in the market

in 22 brands &

amongst the top three

in 15 brands.

Candid (1979)

Candid B

Scaboma

Ascoril (1987)

Relcer

Eptex

Nebinex

Perigard

Razel

Telma

Prasugrel

Paxib

D’acne

Wunder Eye

Onabet





Infrastructure Glenmark commissioned its first manufacturing facility in 1983 and its first R & D facility in

1999 at Nasik in Maharashtra. Today its operations span 80 countries with thirteen

Manufacturing

and

six

R&D

facilities.

Over

the

last

decade

Glenmark

has

established

an

extensive world class Manufacturing & Research Infrastructure thru Greenfield & Brownfield

projects besides acquisitions. Its facilities are approved by Regulatory authorities for

different markets in which it operates.

Location Year Production Lines

Formulations

Nasik, Maharashtra, India 1983 200 Formulations

Rudge Ramos, Paolo, Brazil 2004 Klinger Plant

Jardim, Sao Paolo, Brazil 2004 Klinger Plant

Kishanpura, Baddi,

Himachal

Pradesh,

India 2005 300

Formulations

(Semi

‐solids)

Vysoke Myto, Czechoslovakia (1952) 2007 Medicamenta Plant

SEZ, Indore, M P ,India 2010 Oral Solid Dosage

Nalagarh, Himachal Pradesh, India 2009 Liquids, Creams & Lotions

Colvale, Bardez, Goa, India 2004 Oral solids, Semi‐solids for Regulated markets

Kundaim, Goa, India 2004 Hormones for Regulated markets & Oncology Oral solids

Buenos Aires, Argentina, India 2006 Oncology

Active Pharmaceutical Ingredients (APIs)

Ankleshwar,Gujarat (GSK), India 2002 Blocks for Regulated markets

Kurkumbh, Pune,

Maharashtra,

India 2001 Inte rmediates

&

APIs

for

India

and

SRMs

Mohol, Solapur, Maharashtra, India 2004 Inte rmediates & APIs for India and SRMs

R&D

Location Year Research Focus

Sinnar, Nasik, Maharashtra, India 1999 Formulations Development

Novel Drug Delivery Systems (NDDS)

MIDC, Mahape, Navi Mumbai, India 2000 Discovery of New Chemical Entities (NCEs)

MIDC, Turbhe, Navi Mumbai, India 2000 Clinical Research

Neuchatel, Switzerland 2006 Discovery of New Biological Entities (NBE)

OBP, Oxford, United Kingdom 2008 Clinical Development of NCEs and NBEs

MIDC,Taloja, Panvel,

India

2009 Formulation

Development

The company has guided for a capex of ` 2.4 Bn in FY 11 and continues to invest in infrastructure and

research. Glenmark has announced the following expansion plans:

New API facility at Dahej SEZ

New Semi‐solid plant at Brazil

New Formulations plant at Sikkim

New API plant at Aurangabad

Expansion of the Inhalers manufacturing facility at Baddi.





Sector Overview Over the years, the growth in India & the Emerging Markets has been driven by

increased expenditure on healthcare, rising disposable income, increasing

penetration

of

health

insurance,

changing

disease

profile

and

regulatory

reforms.

The strong growth registered by the Indian economy over the last few years has been

instrumental in augmenting the growth of the domestic pharma market.

Future growth will be driven by increase in healthcare spending on the back of better

healthcare awareness, rising disposable incomes, better diagnosis, improved

healthcare infrastructure and a rise in the penetration of patented products. Semi‐

urban and rural markets are emerging as the new growth drivers in the domestic

market. With high per capita income and increasing access to modern medicine, this

segment is expected to continue its strong growth momentum.

With the introduction of the product patent law in 2005, increasing competition in

the

generics

space,

opportunities

in

lifestyle

therapeutic

areas

and

the

drying

research pipeline of Big Pharma, the Indian market has emerged as an attractive

option for research and drug delivery system based products. In‐licensing provides an

attractive option for companies with a strong distribution brand recognition.

Given that R&D is a high risk, costly and time consuming affair, domestic pharma

companies have resorted to Out‐licensing molecules in return for milestone

payments and collaborating with global innovators to conduct research.

The domestic pharma industry is expected to grow at a CAGR of 16% over the next

five years driven by growth in the Chronic therapy and Specialty segments. The

industry is fragmented and highly competitive with the top player enjoying around

6% market share. As far as the global generics industry is concerned, while the

fundamental factors driving the industry remain strong, the same is bogged down by

intense competition and severe price erosion.

Glenmark has one of the best R&D pipelines among domestic peers and has made

rapid strides in the Generics market in the US within a short span of time. As far as

the domestic formulations business is concerned Glenmark has outgrown the industry

according to IMS

Company Sales Growth EBIDTA OPM PAT NPM EPS RONW ROCE Debt to EV to P/E

` Mn (%) ` Mn (%) ` Mn (%) ` (x) (x) Equity EBIDTA (x)

Aurobindo Pharma

36513

15.3

7882

21.6 5630 15.4 96.71 36.68 21.51

1.18

10.26 10.64

Biocon Ltd. 24327 46.6 4371 18.0 3028 12.5 15.14 18.54 17.03 0.3 16.53 22.49

Cadila Healthcare 36685 23.8 7332 20.0 5298 14.4 25.88 37 25.69 0.67 18.69 24.20

Cipla Ltd. 56786 7.0 13346 23.5 10826 19.1 13.48 21.14 24.08 0 18.34 22.66

Dr. Reddy's Labs 73597 1.7 9748 13.3 3515 4.8 20.77 9.63 12.05 0.39 26.20 70.40

Glenmark Pharma 25244 17.7 6441 25.5 3310 13.1 12.26 16.75 13.92 0.79 14.53 22.93

Lupin Ltd. 48591 24.6 9310 19.2 6997 14.4 15.70 35.05 27.51 0.44 18.45 23.17

Ranbaxy Labs 74677 0.5 4357 5.8 3107 4.2 7.38 7.52 17.24 0.91 54.68 68.24

Source: CMIE & Greshma Research

!

In the

dermatology

segment Glenmark

is the second

largest player in

the domestic

market after GSK

Pharma and is

leveraging on this

therapeutic area

to build a niche

product portfolio

in the

international

markets.





Business Overview Glenmark is a research driven integrated pharmaceutical company with the Standalone

entity’s operations comprising Novel drugs (Research Driven) & Branded Generics

(addressing health care needs of emerging markets like India, Latin America & Africa) . The

Pure Generic business focused on marketing of Generic Formulations, API and Oncology

products in the regulated markets of US, Europe etc, is run under its wholly owned subsidiary

Glenmark Generics Ltd.

Business OverviewBusiness Segment Therapeutic Area Key Market

Novel Chemical Entities Inflammation

Metabolic Disorders

Pain

Gastro Intestinal

Global Markets Via Out licensing

Novel Biological Entities Multiple Sclerosis

Anti‐Platelet

Global Markets Via Out licensing

Branded Formulations Dermatology

Respiratory

Oncology

Cardio Metabolic

CNS

India

Latin America

Semi Regulated Markets

Central & Eastern Europe

Pure Generics & APIs Dermatology

Controlled Substances

Modified Release

Hormones

Immediate Release

US

Argentina, Oncology

EU Markets

Source : Company & Greshma Research

Glenmark Consolidated Revenue Mix


42905454 6372

760618842046

2355

3864

1155

19181580

1361

0

369996

1363

1318

1959

1972

2708

2208

5640

7338

7230

1395

2403

0

232

2000

5000

8000

11000

14000

17000

20000

23000

26000

FY 07 FY 08 FY 09 FY 10

India Branded Generics SRM Branded Generics Latin America Branded Generics

Europe Branded Generics Global API U S Generics

Global Generics Oncology Licensing

R s . M

n





Novel Drugs Business Glenmark has adopted the strategy of out licensing its molecules to large MNCs and

collecting upfront & milestone payments to subsidise the huge costs of Clinical Trials &

Commercialisation. In the last six years Glenmark has struck deals with global pharma majors

like Sanofi Aventis, Eli Lily, Forest Labs, Tejin Pharma, etc. to the tune of US$ 1200 Mn, so far

collecting in excess of US $ 140Mn.

Focus Therapeutic Areas for Discovery


Over the decade Glenmark has built up a Novel Drugs pipeline of 13 molecules with seven

NCEs (New Chemical Entity) & two NBEs (New Biological Entity) in Clinical Trials and one NCE

& three NBEs in pre‐clinical Development. Over 500 Scientists and extensive R&D facilities

across the globe combine to form the hub of Glenmark’s R&D activity.

Nine molecules have so far made it thru Discovery to Clinical trials. Two of these molecules

(Oglemilast & GRC 6211) have been dropped after generating licensing revenues of US $ 86

Mn ( ` 3.87 Bn). Its Osteoarthritis Pain molecule out licensed to Sanofi Aventis if successful will also generate royalties for Glenmark. The balance six novel molecules are available

for

out

licensing

opportunities.

The

company

also

has

an

in‐licensed

novel

molecule

‘Crofelemer’, in Phase III of clinical trials (in India & the US), with marketing rights to 140

countries excluding, North America, Europe & Japan.

Novel Molecule Global Partner Trial Phase Total Fees

US$ Mn

Received

US$ Mn

Status Peak Sales

US $ Mn

Launch

Year

New Biological Entities

GBR 500 ‐ Phase 1 ‐ ‐ Live ‐ 2015

GBR 600 ‐ Pre Clinicals ‐ ‐ Live 1000 2015

New Chemical Entities

GRC 15300 Sanofi Aventis, France Pre Clinicals 350 20 Live 2000 2015

GRC 17536

‐Pre

Clinicals Live

2000

GRC 4039/Revamilast ‐ Phase 1 Live 2000 2015

GRC 10693/Tedalinab Phase 1 Live 2000 2015

GRC 8200/Melogliptin Merck KGaA (Returned) Phase 2 250 31 Live 1000 2015

In licensed

Crofelemer Napo Pharma, USA Phase 3 ‐ ‐ Live ‐ 2012




eptember 20, 2010

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and 30%

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eptember 20, 2010

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Glenmark's Para‐IV Litigation Status

Product Brand Plaintiff Sales ($) Litigation Approval Launch

Ezetimibe Zetia* Schering Plough 1.4 Bn Settled Tentative 2016

Trandolapril

+Verapamil

Tarka* Abbott/Sanofi‐

Aventis

58

Mn Trial

Jan,

2011

Final

(3

of

4 dosages)

Launched

Fluticasone Lotion 0.005% Cutivate* Nycomed 45 Mn Case to be

Scheduled

Awaited 2011

Atovaquone +Proguanil HCL Malarone* GlaxoSmithkline 58 Mn Case Settled Awaited 2011

*IMS Sales for FY ending March 2010 Expected Launch in calendar Year

The current fiscal has seen several favourable developments on Glenmark’s Para IV Portfolio

Settlement of litigation pending between Glenmark and GlaxoSmithKline LLC (GSK)

over patent actions concerning Atovaquone and Proguanil HCL ( prevention and treatment of malaria),

allowing

Glenmark

to

market

and

its

tablets

under

a royalty

‐bearing license from GSK in the 3rd quarter of calendar year 2011, or earlier under

certain circumstances. Glenmark believes that it is entitled to 180 days of exclusivity

as the first generic to file an ANDA for the product.

Entered an exclusive licensing agreement with Par Pharmaceutical, to market

Ezetimibe a cholesterol modifying agent. Under the terms of the licensing and supply

agreement, Par has made a payment to Glenmark for exclusive rights to market, sell

and distribute ezetimibe in the U.S. The companies will share in profits from the sales

of the product.

An agreement to settle their patent litigation involving Glenmark's challenge to

Merck's patent

exclusivity

for

ZETIA.

Glenmark

will

be

able

to

launch

their

product

on

December 12, 2016 or earlier under certain circumstances, ahead of the April 25,

2017 expiration of Merck's effectively ending the lawsuit to launch a generic version

of ZETIA before the April 2017 expiration of the patent exclusivity covering ZETIA.

With final FDA approval received in May 2010, for 3 out of 4 dosages of Tarka,

Glenmark has gone ahead and launched all three dosages of the $58 million

Abbott/Sanofi anti‐hypertensive brand, though litigation continues and trial is

scheduled for January 2011. Glenmark expects to capture Rs.1,000 Mn of the

Rs.2,668 Mn of the market during the exclusivity period.

API

&

Oncology:

The

API

business

which

started

with

a

focus

on

the

semi

regulated

markets

is

now focussed on the regulated markets of US & EU. It will aim to increase vertical integration

levels, taking it from the current 20% to 40% by 2015, assuring Glenmark the low cost

advantage essential for success in the Generic business. The foundation for the Oncology

business out of Argentina was laid with the acquisition Servycal in 2005. Going forward it is

expected to emerge as a key growth driver with the Argentinian subsidiary acting as a global

supply hub of oncology products for both Glenmark Pharma & Glenmark Generics.





Strategy to Consolidate Global Presence As far as Glenmark Pharmaceuticals Standalone Business is concerned, starting as a

branded Generics player with a Focus on the Therapeutic Segments of Dermatology,

Respiratory and Oncology, to move ahead and emerge as a Global Leader with an

innovative drugs portfolio. For Glenmark Generics the plan is to emerge a lead player

in Finished Dosage Formulation & API Supplier for the regulated markets of US & EU

and a strong Global Oncology Business. Glenmarks way ahead is highlighted in the

following two charts





Valuation Near Term Growth Drivers

Strong growth in domestic Formulations market. Potential out licensing of six novels currently in Clinical Trials.

Clinical Progress of In licensed drug ‘Crofelemer’

Near Term Risks.

Slowdown in U S, Europe & Semi Regulated markets

Negative developments on Novel Pipeline

Long Term Growth Drivers

Ramp up in R &D, Manufacturing and Marketing Infra over the last five years

Global alliances for co‐development & commercialisation of Novel Pipeline

Strong R & D Pipeline

Strong growth projections for the Indian & Emerging Branded Formulations markets

Long Term Risks

Successful Clinical trials and Commercialisation of Research Pipeline

Regulatory nods for product launches in Regulated & Semi Regulated Markets

Regulatory changes in global markets

Intensifying competition

in

the

U

S Generics

space

After continuous disappointments on its R &D out licensing program, Glenmark is seeing signs

of improvement in key segments like Branded Generics (India) and niche therapy‐driven US

Generics Business. With the recovery in the base businesses, we expect the stock to achieve our target price of ` 375 (17x FY12), as visibility on Out licensing (Melogliptin,

Tedalinab, Revamilast); newer In licensing deals besides Crofelemer as well as US ANDA

approvals and launches improves. While the base business of the company has been valued

on a price to earnings basis, we have not factored in any revenues that are likely to accrue

from its R&D pipeline. We initiate coverage, with a Buy rating.





Quarterly Consolidated Performance

Profit & Loss (` Mn) Sep‐08 Dec‐08 Mar‐09 Jun‐09 Sep‐09 Dec‐09 Mar‐10 Jun‐10

Sales 5609.2 5827.4 5157.7 5487.4 6025.0 6483.4 7125.0 6963.3

% Change QoQ 21 4 ‐11 6 10 8 10 ‐2

% Change YoY 49 ‐14 ‐10 19 7 11 38 27

Operating Expenses 3915.1 3923.3 5343.4 4223.4 4340.3 4780.9 5308.2 4623.1

PBDITA 1694.1 1904.1 ‐185.7 1264.0 1684.7 1702.5 1816.8 2340.2

OPM 30% 33% ‐4% 23% 28% 26% 25% 34%

Interest 187.1 343.1 719.5 438.4 456.1 367.7 378.0 277.4

Depreciation 225.3 290.7 295.5 311.5 362.5 363.3 168.8 327.3

Other

Income

432.9

78.8

1163.2

25.5

140.6

13.1

38.1

115.7

PBT 1714.6 1349.1 ‐37.5 539.6 1006.7 984.6 1308.1 1851.2

Tax 541.0 534.8 0.0 5.1 197.8 43.9 281.9 295.8

PAT 1173.6 814.3 ‐37.5 534.5 808.9 940.7 1026.2 1555.4

NPM 21% 14% ‐1% 10% 13% 15% 14% 22%

EPS ` (Diluted) 4.59 3.19 ‐4.72 2.07 3.14 3.42 3.70 5.68

Consolidated Revenues grew by 27% YoY during the June quarter due to the Sanofi Aventis

out-licensing income. Revenues from the Generics Business grew by 10% while the Branded

Formulations Business grew by 8% YoY during the quarter. According to the ORG-IMS data for

the quarter Glenmark registered value growth of 27.23% vis-a-vis the industry average of21.26% for the India Formulations Business.

Glenmark’s FYQ1 Consolidated Revenue


13%

28%

20%

30%

9%

Outlicensing India Formulations RoW Formulations Generics API





Financials Consolidated Fiscal Year (Consolidated) 2080 2009 2010 2011E 2012E

Valuation Ratios

P/E 17.8 62.4 21.8 15.3 12.9

EV/PBDITA 13.7 35.3 13.7 11.5 9.0

P/BV 6.8 7.0 3.1 2.7 2.3

Dividend Yield (%) 0.17 0.09 0.14 0.14 0.14

Per Share Data (`)

O/S Shares (Mn) 248.7 250.5 269.8 270.4 270.8

Adjtd Avg Clsg Price/CMP 416.0 446.1 266.3 281.1 281.1

EPS (Diluted) 23.3 7.1 12.2 18.3 21.7

CEPS (Diluted) 26.0 11.0 16.7 24.2 28.2

DPS 0.7 0.4 0.4 0.4 0.4

BVPS 61.0 63.8 87.3 104.3 124.9

Profit & Loss (` Mn)

Sales 20134.9 21457.4 25244.1 30654.0 36866.2

YoY Growth 61% 7% 18% 21% 20%

Change in Stock 1007.1 2111.8 291.5 882.7 1615.2

Operating Expenses 13086.0 19888.1 19094.8 23450.3 28387.0

PBDITA 8056.0 3681.1 6440.8 8086.4 10094.4

OPM 40% 17% 26% 26% 27%

Interest Expenses 710.4 1462.6 1662.6 1305.6 1312.5

Depreciation

&

Amortisation

724.7

1034.2

1206.1

1599.5

1747.6

Other Income 841.5 1495.3 269.5 910.1 15.0

PBT 7462.4 2679.6 3841.6 6091.4 7049.3

Tax 1141.3 744.9 531.3 1126.9 1163.1

Tax Incidence 15% 28% 14% 19% 17%

PAT 6321.1 1934.7 3310.3 4964.5 5886.2

NPM 31% 9% 13% 16% 16%

Dividend 172 100 100 108 108

Payout Ratio 3% 5% 3% 2% 2%

Cash Flow (` Mn)

Operating Cash

Flow

3688.7

157.7

3540.0

4404.5

5019.2

Net Profit 7115.0 2688.8 3839.0 6091.4 7049.3

Depreciation 716.8 1026.8 1206.1 1599.5 1747.6

Net Working Capital ‐3845.6 ‐3876.7 ‐2093.5 ‐3432.9 ‐3894.7

Investing Cashflow ‐5096.2 ‐9501.7 ‐3869.1 ‐2667.9 ‐1323.1

Fixed Assets ‐3977.4 ‐7479.2 ‐3330.4 ‐2190.6 ‐2039.0

Capital WIP ‐1196.6 ‐2081.8 ‐553.6 ‐492.3 700.9

Financing Cash Flow 1915.0 8493.7 684.5 ‐2071.1 ‐2438.1

Borrowings 692 9839 ‐1710 ‐640 ‐1000

Interest paid ‐710 ‐1441 ‐1664 ‐1306 ‐1313

Dividend paid

‐172

0

‐101

‐125

‐126

Change in Cash 507.5 ‐850.3 355.4 ‐334.6 1258.0

Opening Cash Balance 1057.6 1565.1 714.8 1070.2 735.6

Closing Cash Balance 1565.1 714.8 1070.2 735.6 1993.6





Fiscal Year (Consolidated) 2008 2009 2010 2011E 2012E

Balance Sheet (` Mn)

Total Shareholders Fund 15179 15982 23552 28199 33822

Borrowings

9879

20898

18640

18000

17000

Deferred Tax Liability 946 569 710 865 950

Minority Interest 15 32 130 224 253

Total Capital Employed 26018 37480 43033 47288 52025

Net Block 3966 6481 7246 7814 8055

Capital WIP 3372 5454 6008 6450 5799

Intangible Assets 5219 9182 10628 10650 10700

Investments 188 181 181 181 181

Net Current Assets 13272 16182 18971 22192 27289

Total Assets 26018 37480 43033 47288 52025

Return Ratios

RONW (%) 57.4 12.4 16.7 19.2 19.0

ROCE (%) 39.6 13.4 13.9 16.7 17.2

Asset Utilisation Ratios

Sales/Avg. Total Assets 0.93 0.67 0.62 0.67 0.73

Sales/Avg. Gross Fixed Assets 1.69 1.12 0.98 1.05 1.18

Working Capital Cycle (Days)

Inventory 132 141 186 163 158

Debtors 158 200 202 196 196

Creditors 79 72 94 87 83

Net Working

Capital

Cycle

212

269

294

273

271

Liquidity / Leverage Ratios

Current ratio (x) 5.10 4.51 4.62 4.77 4.85

Debt equity ratio (x) 0.65 1.31 0.79 0.64 0.50

Interest cover (x) 11.5 2.8 3.3 5.7 6.4




Shares & Stocks Ltd.Member: NSE (Capital‐ SEBI Reg. INB231352635 and F&0 SEBI Reg. INF231352635)BSE (Capital ‐

SEBI Reg. INB011352631)

124, Viraj, 41/42, 4th Floor, S.V.Road, Khar (W), Mumbai – 400 052.

B dli 91 22 3005 6400 F 91 22 3005 6444 E il h@ h

Greshma Investment Recommendation Interpretation

Expected absolute returns over 12 to 15 months

BUY: > 20%

ACCUMULATE: 10 ‐20%

REDUCE: 0‐ 10%

SELL: <0%

Glemark Accumulation

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