Chairman and Managing Director
In the year gone by the global pharmaceutical industry continued to battle the forcesof stiff competition and pricing pressures in major markets. Glenmark was no exceptionwith our business in key geographies such as the US feeling the impact. In the US annualrevenues were under pressure on account of price-led competition driven by supply chainconsolidation and relatively more competitors per product. On the positive side FY2018-19 marked a milestone in our journey to transform into an innovation-led globalpharmaceutical company with an optimal mix of generics specialty and research-drivenproducts.
Glenmark Pharmaceuticals initiated the process of reorganizing into three differententities that will together make up the Glenmark group of companies. This reorganizationis designed to place us on an accelerated trajectory to attain our objectives in each ofthese verticals as detailed in our strategic roadmap.
The three verticals comprise generics branded and specialty products ActivePharmaceutical Ingredients (API) and breakthrough innovative drugs. We have consistentlyidentified these as the main pillars of our strategic vision and to that extent there isno departure from the past.
This reorganization is designed to place Glenmark on an accelerated trajectory
The Innovation will begin the exercise to raise Company capital to fund its future.
Where the future looks different is that with the separation - completed partially inFY 2018-19 and to be concluded in FY 2019-20 - each business will maximize its potentialby sharpening its focus unlocking value and leveraging resources and partnerships toachieve goals faster than before.
The group's flagship Glenmark Pharmaceuticals will focus on generics branded andspecialty products. The API and innovation units will reside in two separate subsidiariesspun out of the flagship. With the spin-off each company improves its strategic focus andis free to raise capital at valuations that reflect the potential of its business. Eachcan enter into alliances or partnerships to further its business interests and recruitglobal talent that has the passion requisite skills and capabilities to deliver on thefirm's goals and objectives.
While we have always known that each business stands uniquely apart in its thinkingobjectives and resources we believe the timing is opportune to run them independently.The formulations and API businesses have achieved scale. Investments in innovation havebrought two novel molecules GBR 830 for Atopic Dermatitis and GRC 27864 for Painmanagement into Phase 2b of human trials with results expected in the next year.
In spite of the headwinds of greater regulatory rigor and pricing pressure the globalgenerics market will continue to offer a significant opportunity to bring value topatients and medical professionals who are looking for affordable high-qualitysubstitutes for expensive innovator brands. With operations that straddle five continentsstate-of-the-art Indian and overseas manufacturing and an accent on consistent qualitycompliance across the organization Glenmark Pharmaceuticals is well-placed to fulfil thisdemand.
On the API front an unprecedented opportunity is being created by the curtailing ofAPI manufacturing in China the world's largest API manufacturing location owing totighter pollution control norms. With India as the development and manufacturing base andGlenmark's substantial investments in quality infrastructure the API subsidiary GlenmarkLife Sciences is ideally placed to leverage this opportunity in a cost-effective andquality-conscious manner. Moreover we expect the API business to grow at a good pace.
The innovation business in the process of being transferred to an as- yet-unnamed newcompany or NewCo is at an inflection point. With two candidates completingproof-of-concept in humans it is our belief that the separation will accord this unit theindependence and focus that are needed to expedite the development of its pipeline.
Even as we move speedily ahead to complete the process of reorganization GlenmarkPharmaceuticals is tuned in to the dynamics of key global pharmaceutical markets and isresponding accordingly. In India - an intensely competitive branded generics market with anumber of 'me-toos' - we are differentiating ourselves with affordable innovation thatmakes a tangible difference to the lives of patients and their families.
Glenmark Life Sciences is ideally placed to leverage the API opportunity in acost-effective and qualityconscious manner.
In spite of headwinds the global pharmaceutical market will continue to offer asignificant opportunity to bring value to patients and medical professionals.
In the current year we launched the novel patent-protected and globally researchedSGLT2 inhibitor remoglifloz in etabonate 100 mg for Type 2 diabetes in adults. Glenmark isthe first company in the world to launch remoglifloz in and India is the first country toget access to this innovative drug. Globally this class of drugs is emerging as apreferred treatment for Type 2 diabetes management. By bringing it to Indian patients weaim to provide them with an effective high-quality and world-class treatment option.Spurred by launches such as this one the Indian business is expected to grow at 12 to 15%over the next two years.
In the US an unbranded generics market with constant cost pressures we continue toseek approvals for new products while improving cost efficiency and defending our marketshare. On the specialty side we are in favour of partnering with other firms forcommercialization. For our allergic rhinitis brand RyaltrisTM the firstspecialty pharmaceutical product developed entirely by us and currently awaiting approvalin the US as well as for future specialty products we will partner in exchange forupfront fees milestones and royalty.
In Europe we are among the fastest-growing mid-to-large sized companies. To carryforward this growth momentum we will launch more high-potential respiratory products inthis market. We intend to partner for our specialty portfolio. We expect our Europeanbusiness to grow moderately at 10 to Glenmark's First
Global Reporting Initiative aligned Sustainability Report was published this year.
15%. Rest of World (ROW) markets such as Russia and Africa remain a good opportunityand we expect them to continue to grow at 15 to 20% in the foreseeable future.
At Glenmark we believe that enriching lives should not come at the cost ofimpoverishing the environment. We are among a few global drug companies that publish aSustainability Report aligned with the Global Reporting Initiative. Glenmark's first suchreport was published this year. It highlights the key initiatives that we have undertakentowards conducting operations productively while preserving the environment. These includeefforts to use energy efficiently conserve water protect water sources fromcontamination and to manage waste effectively. To cite some examples we have reducedspecific energy consumption by 6% in FY 2018-19 and co-processed 119 MT of hazardouswaste. Four factories have achieved zero liquid discharge. Going forward we will step upour efforts in this direction.
As a responsible corporate citizen Glenmark strives to give back to the communitythrough our Corporate Social Responsibility initiatives. Our major programs focus onimproving child health and promoting swimming as a sport. Our initiatives have touchedover 1.4 Mn lives. Glenmark Joy of Giving our annual festival of philanthropy is a matterof pride for the organization. It is a crucial element of our holistic corporate culturethat encourages employees to support different social causes with enthusiasm and a senseof meaningful purpose.
The year gone by is proof of our long-term approach to doing business whether from thepoint of view of strategy operations or sustainability After considerable thought webelieve that reorganizing our businesses as explained earlier is the most efficient andsustainable way to move to the next level and stay true to Glenmark's mission of EnrichingLives.
I would like to acknowledge the hard work dedication and ingenuity of our employeesthat have helped us reach where we are today. I look forward to their continuingcommitment as we unfetter each business from the priorities and obligations of the othersand let it forge its own path while staying true to the ethos of the larger Glenmarkgroup. I also thank you our investors for your patience and guidance thus far and lookforward to your continued support.
Reorganizing our business is the most efficient and sustainable way to stay true to ourmission of Enriching Lives.
|Glenn Saldanha |
|Chairman and Managing Director |