Glenmark shares plunge 16% on Q4 disappointment

The company reported lower than expected profit, guides for 12-15 sales growth in FY18

Glenmark Pharmaceuticals stocks fell 16 per cent, its biggest single-day fall in eight years, on Friday after a weak March quarter result. The stock closed at Rs 759.35, shedding 145 points.

The Street had high expectations after the launch of multi-billion cholesterol drug Zetia generic on a six-month exclusivity during the December quarter. 

The drug was expected to generate $200-250 million of sales during the exclusivity period itself. 

The stock had then seen an all-time high of Rs 993 on December 1. However, US sales declined sequentially in the March quarter. Also, the company was unable to reduce its Rs 4,600-crore debt.

It reported a net profit of Rs 183.7 crore. Adjusting for one-offs, profit at Rs 240.4 crore was less than half of the Bloomberg consensus estimate of Rs 592 crore. Net profit was further impacted by impairments relating to loss on investment and trade receivables in Venezuela.

Chairperson Glenn Saldanha said he expected FY18 to be a strong year, despite price erosion in the US market. He said sales would grow 12-15 per cent and the company would launch 10-15 products, including three to four in the US, in FY18.

In the quarter, Glenmark’s US revenue grew 54.5 per cent year-on-year to Rs 1,000.45 crore. However, it declined 18 per cent sequentially. The company said Zetia sales would be lower than its initial $200-million estimate. Sales in the US were also impacted by a price erosion.

Domestic market growth of 6.88 per cent to Rs 577 crore disappointed the Street. Domestic sales were growing in double digits during first half of FY17. The management said the muted growth was an aberration and blamed it on demonetisation and correction in inventory ahead of the goods and services tax implementation.