Recent developments could well be a pointer to better days ahead for Glenmark Pharma which has had a relatively poor performance in the past four quarters.
The Mumbai-based firm has bagged a $5-million milestone payment for outlicensing its novel drug delivery systems (NDDS) technology to Medicis Pharma. Glenmark will receive additional payments as the research achieves certain milestones and it will also get royalty upon commercialisation of the product. Glenmark has also settled a patent litigation with the same company over the latter’s two products.
Under the terms of the agreement, Glenmark will be able to launch the generic version of Loprox, one of the products, and will be able to distribute the generic version of Vanos, the other product, as early as December 2013. Loprox is a $15-million product while revenues from Vanos are estimated to be worth $30 million.
These developments, in addition to the company’s improved performance in its specialty and generic businesses, strong pipeline and good prospects on the out-licensing front, are likely to pave the way for a marked improvement in the company’s financials in the coming quarters.
While the performance in the latest quarter shows an improvement in its operating environment, Glenmark is still to show any significant progress when viewed from a trailing four- quarter basis. The company’s stock has also grossly underperformed the broader market indices.
The R&D-focussed company, which struck four out-licensing deals in each of the years between 2004 and 2007, did not sign any deal in the calendar 2008 and 2009. Instead, its two out-licensing deals faced a setback in the past two years, resulting in the discontinuation of milestone payments. It had losses related to inventory and product write-off in the quarter ended March 2009, which has further impacted performance.
However, Glenmark’s company’s US generic business is likely to register a strong performance with six ANDA approvals this fiscal. It’s the only ‘first to file’ contender for four products in the US. Its specialty pharmaceutical business is growing strongly. It has nine new chemical entities and new biological entities undergoing clinical trials in the R&D segment. It’s also actively scouting for a research partner for its molecule Melogliptin and aims to clinch a deal before the end of this financial year.
The pharma major has also lightened its balance sheet. Its latest QIP has helped it reduce its debt by Rs 400 crore to Rs 1,600 crore. Glenmark now expects to further reduce it by another Rs 300 crore by taking recourse to internal accruals and using Rs 450 crore from Glenmark Generics’ IPO fund. It has given a guidance of a 20-25% increase in its topline for this fiscal and an earnings estimate of Rs 300-400 crore. Given the improved conditions, it appears to be on course to meet this guidance.