Glenmark expects big growth from US: Glenn Saldanha

In an e-mail interview, Glenmark chairman says company has stopped supplies to Venezuela

Glenmark Pharmaceuticals posted 48 per cent growth in net profit in the third quarter of FY16, but the result disappointed the Street, which was expecting more robust sales and profit growth.

In an email interview with Aneesh Phadnis, the company’s chairperson, Glenn Saldanha, explains the reasons behind the poor performance. Edited excerpts:

The third quarter result was disappointing as it came below Street estimates on both sales and profit figures. What went wrong?

In major markets, on a constant currency basis, we have recorded a topline growth of 15-20 per cent. The good performance in these markets was negated to a great extent due to the devaluation of currencies in our key emerging markets. Hence, we recorded a muted topline growth of five per cent in the third quarter. However, despite the currency headwinds and emerging markets coming under pressure, we were able to maintain our margins steady at 20-21 per cent. We expect our US, India and Europe businesses to continue to drive growth for the company.

Glenmark recently received approval from the US Food and Drug Administration (FDA) to distribute drugs, but these are being seen as low-value products. What does the growth trajectory in the US market look like going forward?

So far in the current financial year, we have received 15 approvals (12 final and three tentative) in the US. The US business will continue to grow significantly quarter-on-quarter. Next year, we have the launch of cholesterol drug Zetia; so, FY17 should be a big year for the US business as we expect substantial growth from this one product alone. But, the US market is witnessing a significant amount of pricing pressure within the channels, which is leading to our base business eroding to some extent. However, we have been able to negate this impact to a great extent with products like skin treatment cream Mupirocin, which have contributed significantly to our margins this quarter.

Can you give an update of the business in Venezuela. Is there a plan to down size business there or in other countries affected by currency crisis?

Glenmark has stopped supplying to the Venezuela subsidiary from the month of November and is evaluating the situation on a constant basis. At the moment, we are selling off our existing inventories from the country.

In the last quarter, Sanofi decided not to pursue trials on multiple sclerosis drug being developed by Glenmark. What is the status with this programme? Has the company found a new partner to develop and commercialise the drug?

Glenmark believes molecule GBR 500 holds licensing potential for autoimmune disorders and will continue to explore opportunities.