Glenmark Lifesciences to double manufacturing capacity in five years

With formulation makers aiming at de-risk procurement by creating one more source for raw material other than China, the demand for APIs is rising, says company

Bulk drug player Glenmark Lifesciences, which is hitting the stock market with an initial public offering (IPO) next week, is betting on growing demand to more than double its current capacity over the next five years or so.

With many formulation makers (tablets, capsules, injectables, syrups etc) looking to de-risk their procurement strategy by creating one more source for raw material other than China, the demand for active pharmaceutical ingredients (APIs) is rising, says Yasir Rawjee, MD and CEO of Glenmark Lifesciences.

“We see a disproportionately high demand for our key APIs. We feel that this may be a result of many formulation makers looking at a 'China-plus-one' kind of strategy for raw material procurement,” he added. The global API market is expected to grow from $190 billion in 2021 to $260 billion by 2026.

Rawjee told Business Standard that Glenmark Lifesciences has drawn up plans to expand its manufacturing capacity – the idea is to invest Rs 600-700 crore over the next 4-5 years. The current capacity of 720 kilo-litres (kl) will be scaled up to 1,500 kl in the next five years. The company has plants at four sites – Ankleshwar and Dahej in Gujarat and Mohol and Kurkumbh in Maharashtra.

The plan includes both brownfield expansion and setting up a greenfield unit at Solapur, Maharashtra. The company now plans to take the Dahej capacity from 140 tonnes to 400 tonnes. Some Rs 150 crore from the IPO proceeds would be used for this brownfield expansion.

Glenmark Lifesciences has also taken up a 40-acre land parcel in Solapur, in the vicinity of its Mohol plant. It plans to set up a 600 kl unit in Solapur, Rawjee said.

The company has been investing in capex over the last few years–around Rs 50-60 crore a year. Of this, about Rs 25-30 crore would typically be for maintenance capex.

In terms of dependence on China, Glenmark Lifesciences claimed it is fairly back-ward integrated. Rawjee said they have built Indian sources of procuring chemicals and intermediates etc from Indian suppliers, and they are dependent on China for hardly 5-6 percent of their raw materials. As of now the company buys around 35-40 percent of the raw materials from China, but has developed an alternative supplier base too.

The company focuses on four therapeutic areas–cardiovascular, gliptins (diabetes), central nervous system (neurological) and other high-end APIs. The market size in terms of sales for its portfolio of 120 molecules globally was pegged at about $140 billion in 2020 and is expected to grow by 4.3 per cent over the next five years to reach to $180 billion by 2026.

Annual installed capacities as of March 2021

Ankleshwar, Gujarat: 511 kl

Dahej, Gujarat: 141.9 kl

Mohol, Maharashtra: 49.1 kl

Kurkumbh, Maharashtra: 24.6 kl