Shares of Glenmark Pharmaceuticals were trading lower for the second straight day, down 5 per cent at Rs 428 on the BSE on Wednesday amid reports that the company has been charged with manipulating the prices of generic drugs sold in the US.
According to a Reuters report, Glenmark Pharmaceuticals USA was charged on Tuesday with conspiring to fix prices for generic drugs, the US Justice Department said in a statement.
Glenmark allegedly conspired with pharmaceutical maker Apotex Corp and other generic drug companies to increase the prices of cholesterol medication pravastatin and other generic drugs, Reuters reported quoting the department.
The stock of the drugmaker has slipped 8 per cent in the past two trading days. With the past two day’s decline, the share price of Glenmark Pharma has corrected 25 per cent from its 52-week high of Rs 573 touched last month.
On June 22, it had rallied 40 per cent in the intra-day trade after the firm received approval for Favipiravir’s (Fabiflu), a potential Covid-19 drug, by the Drug Controller General of India (DGCI). The approval of Favipiravir (emergency usage approval) is for mild to moderate patients.
Meanwhile, for the January-March quarter (Q4FY20), Glenmark Pharma’s US business continued to disappoint, owing to price erosion in the derma segment, a fall in sales of key products, and Ranitidine impurity issue.
With a thin pipeline (44 pending approvals) and low filings (8 in FY20), analysts at Emkay Global Financial Services expect US growth to remain moderate in the next few years. Net debt remains high at Rs 3,760 crore (vs. Rs 3,650 crore quarter on quarter) and up almost Rs 300 crore year-on-year (YoY). This is much higher than the management guidance of Rs 700-800 crore reduction in FY20. Debt reduction remains key to the stock’s re-rating, in our view, the brokerage firm said in a result update.