The global pharmaceutical industry is evolving at a rapid pace. However certain keytrends can be easily identified: pricing pressure across markets; enhanced regulatoryconstraints; a perceptible shift towards more complex treatment alternatives; decline ofcommodity generics in the US; and macro-economic challenges across emerging markets.
There are some positive trends as well: the global spending on medicine is rising owingto population growth changes in demographic landscape rise in economic wellbeing healthawareness expanded health insurance market and growing access to medicines across theworld. Healthcare spending is likely to touch USD 1.4 trillion by 2020 with pharmergingmarkets expected to consume the largest number of pharmaceutical products; aroundtwo-thirds of the global medicine volumes. Therefore while there are short-termhardships the big picture is one of optimism.
Operating in such a landscape your Company registered a revenue growth of 15.12%which was primarily driven by encouraging performance in India and the US. Our business inIndia continued to grow during the year and gained significant market share with severalnew product launches. The year also saw strong performance of our leading brands acrosstherapeutic areas. We continued to sustain our position among the fastest growingcompanies in the Indian formulations space. Our focus areas (dermatology respiratorycardiovascular and diabetes) continued to drive our India growth story.
Our US business also gained traction as we received the highest number of approvalstill date in the year under review - 24 ANDAs. The slowdown in US FDA approvals forgeneric drugs in prior years had adversely impacted the generics market globally. As aresult of increased approvals growth rebounded after a long period of time for our USbusiness. We received the first injectable approval in the US for BendamustineHydrochloride and this marks our entry into the generics injectables segment in thecountry.
Although our India and the US businesses did well the currency depreciation inemerging markets significantly impacted the overall performance. Emerging marketsconstitute a significant part of our overall business. The sharp decline in global oilprices has led to a significant revenue shortfall in many energy exporting nations.Commodity export giants like Brazil and Venezuela were badly affected and were undersevere economic hardship as oil prices plummeted considerably. Such a scenario impactedour emerging markets business significantly leading to a stretched balance sheet growingdebt and low profits. The contribution of our emerging markets (ex India) businessdeclined to 22% of total revenue as a result of currency depreciation. The contribution ofthis business was much higher in the prior years both in terms of revenue andprofitability. However on a cumulative basis the emerging markets business recorded goodconstant currency growth. Our revenue from our ROW region for the year under review was atRs 9032.54 million an increase of 11.19% from that of previous year. Russia/CIS regioncontinued to remain challenging during the year. Our business in Russia was primarilyimpacted by the currency devaluation. Russia remains our largest market in the ROW region.In the past two years we have launched several new products in Russia strengthening ourmarket position in the respiratory and dermatology categories.
Our operations in Asia and Africa registered encouraging secondary sales growth. TheCompanys subsidiary in South Africa and Kenya recorded growth in excess of 100%. Wealso entered into the respiratory segment in Asia. Our Latin American business was hitmajorly because of the economic downturn in Venezuela. The floundering oil price hastriggered economic turbulence in the country impacting our business.
Our business in Europe grew moderately by 11.25% primarily driven by Western Europe.One major announcement during the year under review was the strategic development andlicensing agreement with Celon Pharma to develop and market the generic version ofSeretide Accuhaler product - Fluticasone/ Salmeterol DPI in Europe. We haveobtained semi-exclusive marketing and distribution rights of the product across 15European countries including Great Britain Germany Belgium the Netherlands ItalySweden Norway and Romania among others. The deal reinforces our growing capabilities inthe respiratory segment and is a significant step forward towards building a strongrespiratory franchise in Europe. We are pleased to collaborate with Celon given theirestablished track record with this inhaler product in Europe.
During the year under review Temasek a leading investment company based in Singaporemade an equity investment of USD 150 million in the organisation. This significantinvestment reiterates the growth oriented philosophy of the organisation and our abilityto keep growing the business over a long period in time.
STRENGTHENING R&D INITIATIVES
Over the years we have built a promising product pipeline on the strength of ourR&D expertise. We made consistent investments in R&D during the year under review.We are increasing our focus in oncology immunology and respiratory area. We discoveredand initiated IND-enabling studies for a novel clinical development candidate GBR 1342 our second clinical development candidate based on the BEATtechnology. It is also Glenmarks second clinical candidate targeting oncologyindications. GBR 1302 our first clinical candidate based on our BEATplatform has demonstrated superiority over current antibody therapies against most HER2positive cancers including breast cancer. If confirmed in clinical trials GBR 1302 couldconstitute an innovative treatment for HER2 positive cancers potentially superior to thecurrently available monoclonal antibody treatments.
During the year under review we had a pipeline of seven NMEs two NCEs and five NBEsin various stages of clinical and pre-clinical development. Our biological entity GBR 830shows great promise to emerge as a valuable therapeutic option to treat patients sufferingfrom autoimmune diseases. It was well tolerated in healthy volunteers and its safety andpharmacokinetics profile in healthy volunteers supports the transition into clinical Phase2 studies. We have an open IND at the US FDA and are seeking Health Canada approval forwhich a Phase 2a study in atopic dermatitis is currently progressing. We are alsoevaluating GBR 830 for other immunology indications. GRC 17536 has shown positive data inPhase 2a proof-of-concept study in patients with painful diabetic neuropathy conducted inEurope and India. We have submitted an IND for a Phase 2b dose range finding study withthe US FDA. GRC 27864 has successfully completed pre-clinical studies and Phase 1 enablingtoxicity studies. GBR 900 the first anti-TrkA monoclonal antibody is to enter clinicaldevelopment. GBR 500 an antagonist of the VLA-2 (alpha2-beta1) integrin was licensed toSano in May 2011. During a planned interim analysis in October 2015 the pre-definedprimary ef_cacy endpoint of the study was not met and treatment was discontinued. Sanosubsequently terminated the GBR 500 licensing agreement. Sanos decision was not dueto safety concerns.
NEW FACILITY IN NORTH CAROLINA US
We expanded our manufacturing footprint in the key strategic market of North America.We are in the final phase of operationalising our formulations plant in Monroe NorthCarolina. The facility is spread over 100000 sq. ft. and manufactures oral solids andinjectables. On commencement the oral solid facility is expected to have a capacity of300-400 million tablets and capsules annually while the injectable unit is expected tohave an annual capacity of 20-25 million vials and pre-filled syringes. We have plans toadd new dosage forms in the near future. The facility dedicated exclusively to the USmarket will help us serve our growing business in the country.
QUALITY AND COMPLIANCE
Quality and compliance are key pillars of our consistent growth story. We are committedto manufacture products which confirm to the highest standards of quality. Ourformulations and API manufacturing facilities across the globe are approved by regulatorybodies such as the US FDA UK MHRA WHO - GMP TPD (Canada) MCC (South Africa) and ANVISA(Brazil). We have been relentless in stepping up our quality benchmarks across all ourresearch and manufacturing facilities to ensure that our products processes andinfrastructure meet the highest international standards. We have 1200 quality assuranceand quality control personnel across Glenmark locations which is 10% of our overallemployee strength. Compliance gives us a significant competitive advantage. Our EnterprisePlatform for R&D and robust IT infrastructure help us ensure greater regulatorycompliance and efficiencies. Our commitment is exempli_ed by our excellent track record ofregulatory approvals and compliances.
At Glenmark we believe that children are the future of a nation thus ourinterventions in CSR have been focused on improving Child Health. We have worked towardsreducing infant and child mortality by reducing malnutrition increasing immunisation andimproving sanitation practices. We have also worked towards providing sustainablelivelihoods and access to healthcare. We have undertaken 8 large-scale projects acrossIndia and Kenya that address these issues. Over the years through our efforts we havepositively impacted over 683000 lives across India and Kenya. This year through our Joyof Giving Festival our employees across 30 locations in 16 countries celebrated thefestival of philanthropy.
We also endeavour to see India on the global map in the field of sports. Our goal is to"Create Champions in Swimming". With young swimmers and young coaches as primarytarget beneficiaries Glenmark Aquatic Foundation has built a core team of highlymotivated experts for the strategic long-term development of swimming as a sport in India.We have currently set-up a Centre of Excellence in Mumbai and have recently partnered withSAI (Sports Authority of India) to set up another centre in Delhi. We have also beenconducting coaching clinics in association with the American Swim Coaches Association.
Although the year under review has been challenging we continued to act withresilience and delivered encouraging outcomes. We also remain optimistic as we enter thefinancial year 16-17 as it is an important year for the organisation on several fronts. InDecember 2016 we will launch Generic Ezetimibe where we have sole exclusivity in the USon this USD 2.3 billion product. Also with the increase in the number of ANDA approvalsfor the organisation we will continue to grow our base business. In the US we will remainfocussed on _ling niche competition products rather than commodity products and willenter new segments where we feel competition will be limited. In India new brandintroductions continue to drive our growth along with the strategy of divisionalisation.In Europe while the base business will continue to grow we are excited about theprospect of getting an approval for Generic Seretide which will mark our first inhalerlaunch in the region. In emerging markets we watch with caution how these markets areturning out especially with currency challenges across most emerging markets. However theemerging markets business (ex-India) will now be less than 20% of the overall revenue andthe US dollar based business should increase in terms of proportion to overall revenue.This should provide a good hedge for your organisation and thus going ahead we feel theimpact of currencies on the business should not be materially significant. However westill feel confident that in constant currency terms we will be able to grow the emergingmarkets business over the next few years.
On the innovation pipeline we continue to remain excited about launching our ownproprietary product globally in future and remain well invested in this business. Duringthe year we are looking forward to getting readouts for two of our NBEs viz GBR 830 andGBR 1302 which are at an important stage in the development process. GBR 1302 is based onour proprietary BEAT platform and thus has an added significance for theorganisation.
Your organisation remains well poised for continuous and sustained growth over the nextseveral years. In the next decade our aim is to transform the organisation to aninnovative company with revenues being generated from the innovative portfolio of thebusiness. Our investment in the base business will enable us to sustain growth over thenext several years. Our objective will also be to build global leadership position acrossour core therapy areas of dermatology respiratory and oncology.
Our robust pipeline of products strong R&D capabilities strategic manufacturinglocations along with a dynamic global team and a sound governance structure havecontributed to help us emerge as a promising integrated research-driven globalpharmaceutical company. We will continue to deliver on stakeholder expectations withincreased profitability and improved cash flows in the coming years.
As we move towards the next altitude of growth and sustainability I thank you forbacking us at every stage and seek your continued support and guidance in our endeavour.
Chairman & MD