India's Glenmark bets on U.S. sales to offset emerging markets weakness

By Zeba Siddiqui

MUMBAI (Reuters) - Indian drugmaker Glenmark Pharmaceuticals is counting on strong growth in the United States, where it will launch a dozen new medicines, to offset weakness in emerging markets this year, its chief executive said.

One of India's top 10 drugmakers by sales, Glenmark has seen its profit hit in recent quarters by currency volatility in Russia, Venezuela and other emerging markets, after a steep decline in oil prices and China's devaluation of the yuan.

"Our U.S. business right now is more than compensating for the hit we are taking in emerging markets," Glenn Saldanha said on the sidelines of the company's annual general meeting in Mumbai.

Excluding India, emerging markets account for about a quarter of Glenmark's total sales, and have been a driver of margin growth in the last few years. However, Saldanha said they will contribute only about 20 percent to sales in the fiscal year ending in March 2016.

Citing worries that the company may not be able to sustain those margins going forward, several brokerages, including JPMorgan, have downgraded Glenmark's stock in the last few months.

Glenmark is one of only a few Indian drugmakers that have received a steady number of approvals by the U.S. Food and Drug Administration to launch generic medicines this year.

Many of its local peers have faced a lag in approval timelines after the FDA overhauled its review process.

Weakness in Glenmark's emerging markets caused it to miss analysts' profit estimates for the quarter ended June.

The company, in which Singapore's sovereign wealth fund Temasek invested $150 million in April, has said it expects to launch 10-12 drugs in the United States in 2016 and hopes to grow its U.S. business by 18-20 percent.

Those launches will include a copy of U.S. firm Merck & Co's blockbuster cholesterol medicine Zetia, which Glenmark expects to roll out by December 2016, Saldanha said. Glenmark was the first to file with the FDA to launch a copy of Zetia, and is entitled to a six-month exclusivity on the market.

Many of its peers, including Sun Pharmaceutical Industries and Lupin have acquired companies in the United States to add scale there, but Saldanha said Glenmark won't make acquisitions for at least another two years.

"Valuations are crazy," he said. "Companies are overpaying for some of these assets ... so in the near term we would rather focus on our pipeline and building our business organically."

(Additional reporting by Abhishek Vishnoi in Mumbai; Editing by Sumeet Chatterjee and Susan Fenton)