Glenmark Pharmaceuticals
New US approvals to take earnings to a new high
April 01, 2015
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Compan
y Update Surajit Pal
[email protected] +91‐22‐66322259
Rating BUY
Price Rs788
Target Price Rs1,186
Implied Upside 50.5%
Sensex 28,260
Nifty 8,586
(Prices as on April 01, 2015)
Trading data
Market Cap. (Rs bn) 213.8
Shares o/s (m) 271.2
3M Avg. Daily value (Rs m) 1310.4
Major shareholders
Promoters 48.31%
Foreign 35.07%
Domestic Inst. 5.89%
Public & Other 10.73%
Stock Performance
(%) 1M 6M 12M
Absolute (0.2) 12.1 36.1
Relative 3.5 5.7 10.2
How we differ from Consensus
EPS (Rs) PL Cons. % Diff.
2016 41.9 37.2 12.8
2017 79.5 51.1 55.6
Price Performance (RIC: GLEN.BO, BB: GNP IN)
Source: Bloomberg
0100200300400500600700800900
Apr‐14
Jun‐14
Aug‐14
Oct‐14
Dec‐14
Feb‐15
Apr‐15
(Rs)
Glenmark has seen a steady performance over the last few years and we expect
them to be in a favourable position going forward to gain from a large number of
approvals in the USA and the US sales is expected to grow at a CAGR of 33% for the
next three years. With US accounting for 34% of the existing turnover, GNP we
believe GNP is in a sweet spot. With 64% revenues from US, EU and ROW,
Glenmark is in a favourable position to gain from (a) strong flow of approvals in
US, (b) turnaround in key ROW markets with launch of high‐end drugs and (c)
expansion of operating margin in non‐US exports. Besides, we expect value
unlocking of NCE/biologics, along with consistent growth of 16‐18% in domestic
formulation to turn out to be the inflection point for the company. The company is
set to receive approvals in 25‐30 generics in US along with sole exclusivity in Zetia
in 12‐24 months. Launch of Seretide generics and Oncology drugs in key markets
such as Brazil, Mexico and Russia will expand operating margin of ROW sales.
With strong potential in US generics, India formulations and branded generics in
ROW markets, we expect a CAGR of 36% in revenues in FY14‐17E on rapid progress
in sales and profitability. Key headline margins will be benefitted by 180‐200bps in
FY15E‐17E on company’s progression in high‐end products in the value chain. With
better clarity on US generic potential and Seretide generic approvals in ROW
markets, we increase our core earnings estimates by 12% and 35% for FY16E and
FY17E, respectively. Our core EPS estimates are Rs25.2, Rs42, and Rs58.5 in FY15E,
FY16E and FY17E, respectively. We upgrade our recommendation to ‘BUY’ and
increase TP to Rs1,186, which implies potential upside of 50% at the current
valuation.
Key financials (Y/e March) 2014 2015E 2016E 2017E
Revenues (Rs m) 60,052 65,915 82,953 113,977
Growth (%) 20.3 9.8 25.8 37.4
EBITDA (Rs m) 13,179 14,317 19,660 33,623
PAT (Rs m) 5,423 6,831 11,368 21,572
EPS (Rs) 20.0 25.2 41.9 79.5
Growth (%) (9.9) 26.0 66.4 89.8
Net DPS (Rs) 2.0 2.0 2.0 2.0
Profitability & Valuation 2014 2015E 2016E 2017E
EBITDA margin (%) 21.9 21.7 23.7 29.5
RoE (%) 18.9 20.8 27.6 38.2
RoCE (%) 11.2 12.2 16.7 24.7
EV / sales (x) 4.0 3.7 2.9 2.1
EV / EBITDA (x) 18.1 16.9 12.3 7.1
PE (x) 39.4 31.3 18.8 9.9
P / BV (x) 7.2 5.9 4.6 3.2
Net dividend yield (%) 0.3 0.3 0.3 0.3
Source: Company Data; PL Research
April 01, 2015 2
Glenmark Pharmaceuticals
US generics: Past delays from regulators to bulk‐up approvals in FY16E‐17E: US
revenues are expected to gain 33% CAGR in FY14‐17E on the back of annual
approvals of 12‐15 products. Glenmark’s US revenues had been impacted with
only five approvals in FY15, while it currently has a pipeline of 25 and 20 ANDAs
which are matured more than 36 months and 24 months.
Zetia to lead revenues from key Para‐IV drugs: Glenmark’s US pipeline for
approvals in FY16‐18E comprises of limited competition drugs, FTF opportunities
and branded generics. Zetia, however, will provide best opportunity with
US$240m revenue potential in FY17E. Other key drugs are Welchol, Finacea,
DDAVP, Zyvox, Ortho Tri‐cyclen Lo and Nitroglycerin. There are also few
approvals expected in older generics with sizeable market size like Telmisartan
HCTZ and Clarinex.
Investment in high‐end drugs to provide sustainable growth in the long term:
We believe that current rise in investments is mainly due to inclusion of high‐
end drugs such as inhalers, oncology injectables and dermatology. We expect
the company to venture into biosim opportunities, given the high commercial
benefits and available expertise of R&D in biologics. With focus on key markets,
clinical trials for MDI inhalers is expected in the near term for markets which
allow generic inhalers as automatic substitute to patented inhaler.
India sales continue to outperform industry with expansion in niche therapies:
With support from the portfolio of strong brands and expansion of market share
by 100bps (3.2%) in FY10‐14, we expect domestic sales growth to outperform
industry growth and achieve 18% CAGR in FY14‐17E. The company’s strong
growth is attributed to its focus on fastest growing therapies and strong brand
presence. The company’s core therapy contributes 85% of domestic revenues,
while top‐25 brands contribute 58% of domestic formulations in FY14. However,
an unfavourable verdict on Zita and Zita‐Met may cause loss of sales by 2.6% of
sales and PAT of 1.9% in FY16E.
Russia, Brazil, Venezuela and Mexico hold the key to growth: With 32%
contribution of ROW market, Glenmark has the second most diversified
infrastructure in ROW markets, spanning across Latam, Russia/CIS, Africa and
Asia. This will help the company in mitigating volatility in emerging market
currencies such as Russian Rouble or Venezuelan Bolivar since November 2014.
With focus on oncology drugs to help expanding base in Latam, approvals of
Seretide in key markets such as Russia, Brazil, Mexico and Philippines will boost
company’s sales in FY15E‐18E.
Value unlocking in R&D could reach up to US$100‐120m in FY16E‐17E: With
ongoing clinical development of two NCEs and four NBEs, we expect US$100‐
120m revenues in FY15‐17E. We believe GBR‐500 and GRC‐17536 will be
potential candidates to trigger milestone revenues of US$20m each in FY16E,
while GBR‐1302 (bi‐specific antibody targeting Herceptin 2 & 3) will be a strong
candidate for receiving out‐license fees of US$30‐50m in FY17E.
April 01, 2015 3
Glenmark Pharmaceuticals
Peer disparity in valuing R&D potentials: Compared to its peers (SPARC, Dr
Reddy’s) for their investments in R&D of NDDS/NDA products with potential of
much lower revenues, we find value of Glenmarks’ annual investments of
US$45‐50m for NCE/biologics remains non‐existent in the company’s current
valuation. Rather, the company is punished with lower EPS and lower PE in
comparison to its peers. To derive comparable EPS of Glenmark with peers, we
add back US$50m R&D costs of NCE/NBE research, post adjustment of tax
benefits/shields to core earnings. We forecast adj. EPS of Rs34, Rs67, Rs76 in
FY15E, FY16E and FY17E, respectively.
April 01, 2015 4
Glenmark Pharmaceuticals
Key revenue sources poised for wave of growth
Glenmark conventionally depends upon US generics and Indian formulations for
drawing revenue growth and profitability. With two major divisions for splitting
geographical revenues: Generics and Specialty, Glenmark’s revenues from US and
India formulations remain the key performers of Generics and Specialty businesses,
respectively. With DPCO‐led reforms in prices of essential drugs, we believe India
formulations will be able to provide stable CAGR of 16‐18%, while US generics
growth will highly depend on flow of approvals and robustness of pipeline. With
rectification of R&D strategy for generics since FY12, Glenmark has developed a
competitive product pipeline for US generics, which is poised to grow with an
anticipated pick up in USFDA’s flow of approvals in FY16 onwards.
Exhibit 1: Glenmark’s Business structure built up of global revenues
Source: Company Data, PL Research
Glenmark Pharma
100%
Generics
46%
US Generics
34%
EU Generics
3%
LatAm Oneology Generics
1%
APIs
8%
Speciality / Branded
53%
Domestic Formulation
26%
Semi Regulation Market
17%
LatAm Branded Formulation
6%
EU Branded Generics
4%
NCE Out License
1%
April 01, 2015 5
Glenmark Pharmaceuticals
Exhibit 2: Contribution of major geographies, core sales growth
29 33 34 34 31
31 27 26 25 27
24 24 24 23 25
‐
5
10
15
20
25
30
35
‐
10
20
30
40
50
60
70
80
90
FY11 FY12 FY13 FY14 FY15E
US (%) India (%) ROW (%) Core sales gr (%) (RHS)
Source: Company Data, PL Research
Exhibit 3: Glenmark's growth sensitivity more skewed towards growth in US generics
‐10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Glenmark sales gr (%) India Frmls gr (%) US sales gr (%) (US$)
Source: Company Data, PL Research
US generics: New spring is in the offing
With maturity of more than 24 months in 45 ANDAs, Glenmark is poised to receive
strong flow of approvals in FY16‐18. While the delay in approvals (only five approvals
in FY15) is expected to turn FY15 into a lean year with 1% decline in US revenues
(US$ terms), we expect minimum of 24 approvals in 12‐18 months as (a) those many
ANDAs crossed maturity of more than 36 months and (b) anticipated pick‐up of
FDA’s approval activity.
Exhibit 4: FTF opportunities in US
Brand Molecule Originator Branded sales in US (US$ m)
Zetia Ezetimibe MSD (Merck USA) 2,000
Finacea Azelic acid gel 15% Bayer/Intendis 105
Source: Company Data, PL Research
April 01, 2015 6
Glenmark Pharmaceuticals
Glenmark’s pipeline for approvals in FY16‐18E comprises of limited competition
drugs, FTF opportunities and branded generics. Welchol, DDAVP, Zyvox, Ortho Tri‐
cyclen Lo, Nitroglycerine and one undisclosed product (sales of >US$50m) offer
opportunities in limited competition drugs, while approvals in Zetia and Finacea will
offer opportunities in sole exclusivity in US. There are few approvals expected in
older generics such as Telmisartan HCTZ and Clarinex which continues to offer
sizeable market size for new generics. We expect approval of old product
Omeprazole in FY15 to offer sizeable sales in FY16E‐17E.
Key Para‐IV drugs to drive upcoming approvals in US generics
We expect new approvals to drive growth in US generics of Glenmark by 32% and
77% (USD terms) in FY16E and FY17E, respectively. Glenmark is gaining traction in US
generics from docile growth of 8% in FY14 and decline of 1% in FY15 due to course
correction with higher allocation of R&D expenses for generics since FY12. The
company’s average yearly filing was 12‐14 ANDAs since FY12, with focus on larger
niche drugs in limited competition opportunities. We believe that management
remains selective in choosing therapeutic areas to make its entry into new
therapeutic areas as it did in OC and controlled substance drugs. Glenmark currently
is focusing on oncology, complex injectables, immunosuppressant and plans for
further foray in derma products. Current filings in key oncology drugs such as
Treanda and Alimta will gain traction from FY18 onwards.
While management has not clarified on new filings in high‐value drugs, we expect
the company to continue with larger share of R&D costs for generics due to strong
probability of foray in Respiratory drugs and Biosim products. Given the company’s
launch of respiratory products in key ROW markets, we expect R&D expenses to rise
to 12% of sales from FY16 onwards on the back of its focus on key developed
markets. With Glenmark’s expertise in developing novel biologics, we also expect the
company to venture in to partnership for developing pipeline of biosims which will
serve the company’s growth in developed markets in the long term.
Exhibit 5: Glenmark's strong progression in ANDA filings post rectifying strategy since FY12
Pending Approval
(FY12)
Pending Approval (9MFY15)
Authorised Distributor
(FY12)
Authorised Distributor
(FY15)
Immediate release 11 31 39 47
Hormones 4 14 11 11
Modified release 4 4 7 9
Derma Prods 3 10 19 23
Controlled substance 0 0 3 4
Oncology injectables 3 8 0 0
Complex injectables 0 5 0 0
Immunosuppressant 0 2 0 0
Others 14 0 0 0
Total 39 74 79 94
Source: Company Data, PL Research
April 01, 2015 7
Glenmark Pharmaceuticals
Exhibit 6: Glenmark’s key opportunities in limited competition drugs in US in FY16‐18
Brand Molecule Therapies US Mkt size (US$ m)
FTF holders Expected launch
Expected PV of EPS
(FY16E‐18E)Remark
Clarinex Desloratadine Anti Histamine/COPD
200 Generic FY16 3.9
Market share expected at 5‐12% over medium term among competition of 10 generics.
Welchol Colesevelam hcl CVS (anti cholesterol)
340 Impax/Lupin/Glenmark
April FY1610.7
Glenmark to gain better market share of 10‐15% as Lupin expects delay in approval by 6‐8 months. Expected to be limited competition for the time being
DDAVP Desmopressin Acetate
Anti‐Diuretic 130 Generic May/Jun FY16 2.5
Continue to be limited competition drug among Teva, Mylan, Actavis and Glenmark
Renvela/Renagel Sevelamer Carbonate
Chronic Kidney disorder
907 Shared Jun FY16 1.2
Strong competition with multiple filers including many generic majors: Lupin, Natco, Glenmark, Invagen, Endo, Sandoz, Actavis. Impax already launched AG in Apr 2014.
Micardis HCTZ Telmisartan HCTZ
210 Generic Sept/Oct FY16 5.3
Limited competition expected among Lupin, Mylan, Torrent, Alembic and Glenmark
Undisclosed product
NA NA 50 Generic H2FY16 2.4
Glenmark did not disclose the name of the brand but gave indication of limited competition of 2 generics
Zyvox Linezolid Anti‐microbial
464 Shared Q3FY16 6.0
Limited competition among Teva, Mylan, Glenmark and Gate Pharma
Finacea Azelic acid Dermatology (moderate rosacea)
105 Sole Jul/Aug 2015 19.5
Exclusivity to expire in 2018. Patent challenge is still on in the Court.
Ethinyl Estradiol, Norgestimate
Ortho Tri‐Cyclen Lo
OC (Hormones)
450 Teva Dec‐15 2.8
Teva to launch the drug in Jun/Jul 2015 as per settlement. Lupin, Actavis and Glenmark to follow it up in Dec post exclusivity.
Nitroglycerine Nitroglycerine Multiple use as adjunct therapy
100 Generic Q4FY16 3.1
No generic in US though off‐patent long back. Glenmark previously withdrew from US market as it lacked FDA approval.
Crestor Rosuvastatin CVS (anti cholesterol)
3164 Shared July FY17 2.6
Highly competitive with expected launch of 10 generics.
Zetia Ezetimibe CVS (anti cholesterol)
2000 Sole Dec FY17 19.5
Sole exclusivity of 134 day ends on Apr 25, 2017. Tied with Par Pharma to distribute and share profit equally.
Multaq Dronedarone hcl
CVS (Anti arrhythmia)
319 Actavis/ Shared
Dec FY17 1.8
Actavis claims to have sole exclusivity. Assume limited competition between two generics and expect Glenmark launch in December 2016.
Strattera Atomoxetine hcl ADHD 453 Shared May FY180.1
Expect strong competition as there are 8 TAs. Expect launch of 10 generic on day‐1 of genericisation
Nasonex Mometasone Furoate
Seasonal & Perennial allergix rhinitis
1184 Shared Oct FY18 NA
Initial approvals are expected for Apotex and Teva. Merck lost the case in Appeal court against Apotex but no approval given to generic players yet. Teva was sued post filing in Jul 2014. Concern that the drug could convert into OTC.
Source: Company Data, PL Research
April 01, 2015 8
Glenmark Pharmaceuticals
Zetia to drive portfolio of FTF drugs in FY16‐18E
Glenmark’s opportunity in Zetia exclusivity of 134 days in the US is by far the largest
since its foray in the generic market. Zetia is a cardiovascular drug with current US
market size of US$2bn at originator’s price. The company has settled with MSD
(originator) to launch the cardiovascular drug on December 12, 2016, with sole
exclusivity till April 25, 2017. To reduce financial risk in case of adverse legal
outcome from Para‐IV challenge, Glenmark tied‐up with Par Pharma in FY10 with
sharing rights to market and distribute Zetia generic in US during exclusivity.
Assuming equal sharing of profit and 60% market of generics in exclusivity, we
expect Glenmark to gain profit of US$90m in FY17E.
Older approvals in niche continues to yield from Derma and OC
With approvals in Omeprazole, Ashlyna and Tarka in FY15, Glenmark’s core portfolio
of older molecules in US, with sizeable markets and limited competition has been
expanded. Currently, Glenmark receives 30‐35% of core US revenues from older
molecules in derma and OC which are expected to reach 60% in the long term when
patent cliff is likely to impact the flow of new approvals across the industry. In derma
and OC portfolio, Glenmark currently has 24 ANDAs pending for approval, while 34
products are in‐licensed to market and distribute in US. Glenmark’s other major
products in older molecules are Gabapentin, Zolmitriptan, Acamprosate, Riluzole,
Fluticasone, Malarone, Topicort, Bactroban, Vanos, Omeprazole and Hydrocortisone.
Exhibit 7: Glenmark receives five approvals from US FDA in FY15
Brand Molecule Therapies Approval Date Current Mkt Share (%) Remark
Lunesta Eszopiclone CNS 15‐Apr‐14 18Launched on the first day. Currently, ranked third in Rx list
Micardis Telmisartan CVS 7‐Jul‐14 21Approved and launched on day‐1 post 180‐days exclusivity
Vanos Fluocinonide Dermatology 14‐Jul‐14 25Strong opportunity due to limited competition with Taro, Perrigo and Fougera
Prilosec Omeprazole GI 31‐Oct‐14 4Sizeable market still exists though major market shifted to OTC.
Ashlyna Ethinyl Estradiol; Levonorgestrel
OC 23‐Feb‐15 NAOverall market size is US$160m. Launched in branded generics as 4‐5 brands from other generics have strong presence
Source: Company Data, PL Research
April 01, 2015 9
Glenmark Pharmaceuticals
Foray in niche therapies continue to drive India sales growth
With support from portfolio of strong brands, Glenmark’s domestic formulations
have been growing at 19% CAGR in FY10‐14 and its market share has increased to
2.2% from 1.2%. Despite India being one of the highly competitive markets for
branded generics, the company’s strong growth is attributed to focus on some of the
fastest growing therapeutic areas and developing strong brands. The core domestic
portfolio focuses on five therapies—dermatology, cardiovascular, anti‐diabetics,
anti‐infective and respiratory which contributes 85% of domestic revenues, while
top‐25 brands contribute 58% of domestic formulations in FY14. With continuation
of alignment of portfolio in fast growing segments, we expect domestic formulations
to achieve 18% CAGR in FY14‐17E.
Exhibit 8: Influence of strong brands drives contribution of Top‐25 products to 58%
Domestic Brands Sales in 2011
(Rs m)Sales in 2012
(Rs m) Sales in 2013
(Rs m)Sales in 2014
(Rs m)
Telma 545 751 968 1,190
Telma‐H 426 522 811 903
Ascoril plus 606 665 738 761
Candid‐B 421 523 616 676
Candid 295 335 447 504
Alex plus Cough 185 245 372 466
Telma‐AM 123 228 322 405
Lizolid 189 204 253 295
Ascoril‐LS 79 95 168 243
Zita‐Met ‐ ‐ 50 370
Candibiotic 141 181 192 235
Milixim 102 110 166 232
Candid mouthwash 133 150 207 220
Altacef 201 180 200 219
Elovera 126 152 184 212
Dubagest 86 102 149 212
Momate 142 150 182 209
Zita ‐ ‐ 7 180
Bon‐K2 32 63 164 198
Razel 85 113 185 196
Glimulin‐MF 106 144 159 191
Candiderma plus 137 142 148 177
Stiloz 89 110 148 172
Tacroz 110 115 146 172
Candid‐V 131 145 182 171
Sales of Top‐25 brands 4,490 5,425 7,164 8,809
Contribution to Dome. Formulations
53 54 55 58
Source: Company Data, PL Research
April 01, 2015 10
Glenmark Pharmaceuticals
Exhibit 9: Contribution of Top products in 2014
27
38
58
‐
10
20
30
40
50
60
70
Top 5 products (%) Top 10 products (%) Top 25 products (%)
Source: Company Data, PL Research
Exhibit 10: Domestic Revenues over a period
‐
5.0
10.0
15.0
20.0
25.0
30.0
35.0
‐
5,000
10,000
15,000
20,000
25,000
30,000
FY12 FY13 FY14 FY15E FY16E FY17E
Domestic frml (Rs m) Growth (%) (RHS) CAGR (%) (RHS)
Source: Company Data, PL Research
Minor impact from HC restriction on sales of Sitagliptin in India
Glenmark received a setback in domestic formulation sales on account of an adverse
court verdict from Delhi HC on the sales of Zita (Sitagliptin) and Zita‐Met (Sitagliptin‐
Metformin) in India. With different salt combinations of Sitagliptin, Glenmark
launched the two branded generics of MSD’s patented drug Januvia and Janumet in
April 2013. While we are unable to forecast the outcome of the Glenmark’s appeal in
Supreme Court, we believe the company could face a sales loss in the short term.
Annual sales of the two molecules are Rs550m (Zita sales: Rs180m, Zita‐Met sales:
Rs370m). If the Court’s order restriction sustain, it would impact domestic
formulation sales by 2.6% and PAT by 1.9% in FY16E.
April 01, 2015 11
Glenmark Pharmaceuticals
Exhibit 11: Sitagliptin market by key players in India
Molecule Company Brand Sales (Rs m)
Sitagliptin MSD Januvia 855
Sun Pharma Istavel 436
Glenmark Zita 180
Mkt size 1,471
Sitagliptin+Metformin MSD Janumet 913
Sun Pharma Istamet 845
Glenmark Zitamet 370
Mkt size 2,128
Source: Company Data, PL Research
Exhibit 12: Progress of domestic sales (MAT, monthly sales) over 12 months (AIOCD)
Source: Company Data, PL Research
Local brands, respiratory, derma to drive EU generics and brand sales
With US$29m average annual acquisition of local brands, Glenmark’s EU sales
(brands and generic) achieved 35% CAGR in FY11‐14. With focus on derma,
respiratory and anti‐infective therapies, Glenmark plans to foray further in Eastern
Europe and Russia. The company also plans to focus on combination inhalers
(Seretide, Symbicort) where generic inhalers are substitutable to the branded drugs
in the market. We forecast 12% CAGR in EU sales in FY14‐17E.
33.3
‐
10.0
20.0
30.0
40.0
‐
50
100
150
200
Feb'14
Mar'14
Apr'14
May'14
Jun'14
Jul'14
Aug'14
Sept'14
Oct'14
Nov'14
Dec'14
Jan'15
Feb'15
Sales (Mth) Growth (%) (RHS) Avg. Gr. (%) (RHS)
16.9
14.0
14.5
15.0
15.5
16.0
16.5
17.0
17.5
1,400
1,500
1,600
1,700
1,800
1,900
2,000
Feb'14
Mar'14
Apr'14
May'14
Jun'14
Jul'14
Aug'14
Sept'14
Oct'14
Nov'14
Dec'14
Jan'15
Feb'15
Sales (MAT) Growth (%) (RHS) Avg. Gr. (%) (RHS)
April 01, 2015 12
Glenmark Pharmaceuticals
Exhibit 13: EU sales, growth driven by acquisition of local brands
‐
10.0
20.0
30.0
40.0
50.0
‐
1,000
2,000
3,000
4,000
5,000
6,000
FY11 FY12 FY13 FY14
Sales (Brands+Generic) (LHS) Growth (%)
Average gr (%) Growth in Intangible assets (Rs bn)
Source: Company Data, PL Research
ROW exports: Russia, Brazil, Venezuela hold the key to growth
With 32% contribution of ROW market, Glenmark has the second most diversified
infrastructure in ROW markets, spanning across Latam, Russia/CIS, Africa and Asia.
While the company focuses on oncology drugs to expand base in Latam in the
medium term, approvals of Seretide in key markets such as Mexico, Philippines and
Russia will boost company’s sales in FY15E‐18E. Glenmark’s sales in Brazil has
received boost with resumption of new flows of approvals after a hiatus of two
years, while strong offtake drives sales in Venezuela. Despite volatile currency
underlining risk in ROW sales and margin, we expect Glenmark’s focus on derma,
oncology and respiratory drugs to drive its ROW revenues by 16% CAGR in FY14‐17E.
Exhibit 14: Latam, SRM, API sales, ROW growth
‐
5
10
15
20
25
30
‐
2,000
4,000
6,000
8,000
10,000
12,000
FY11 FY12 FY13 FY14
Latam SRM API RoW CAGR (RHS)
Source: Company Data, PL Research
April 01, 2015 13
Glenmark Pharmaceuticals
Strong pipeline of NCEs to yield positive surprises in FY16‐18
With change in innovation research strategy, the company is currently focusing on
first‐in‐class molecules in comparison to its earlier strategy of best‐in‐class
molecules. This will increase number of out‐license deals with large Pharma
companies as MNC Pharma has adopted more cautious approach and prefer only
successful clinical development of ‘proof‐of‐concept’ or Phase 2(a). We believe
Glenmark’s high‐risk‐high‐return policy for pursuing current pipeline of novel
molecules (which follows unproven pathways) will attract higher probability of out‐
license deals. With growing presence of biologics in global pharma market, Glenmark
has four NBEs (novel biological entity) in clinical development which are in line with
the trend in the global innovation research.
With current portfolio of molecules in clinical development, we expect US$100‐
120m revenues in FY15‐17E. Anticipating multiple data points from the undergoing
molecules, we expect potential trigger point for out‐license income from the pipeline
of NCE/NBE molecules. We believe GBR‐500 and GRC‐17536 to be potential
candidates to trigger milestone revenues of US$20m each in FY16, while GBR‐1302
(bi‐specific antibody targeting Herceptin 2 & 3) will be a strong candidate for
receiving out‐license fees of US$30‐50m in FY17.
Exhibit 15: Brief details of R&D pipeline
Class of molecule Indications Current Status
NCEs
GRC‐17536 TRPA 1 Inhibitor Neuropathic pain Ph‐I completed in Netherlands. Currently, patient enrolling in EU and India are ongoing for POC. 40bn patients worldwide with potential market of US$2bn
Respiratory disorders
Promising result in Ph‐I for respiratory, cough, COPD. Completed ph‐II(a) in UK for respiratory. Recruiting for POC in Cough condition. 300mn patient globally with market size of US$15bn.
GRC‐27864 mPGES‐1 Inhibitor Chronic inflammatory conditions including pain
Optional right to Forest Labs for out‐license the molecule upon successful completion of Ph‐1. Data on the completion of Ph‐1 study is expected in H2FY16.
NBEs
GBR‐500 (Vatelizumab) VLA‐2 Antagonist (mAb)
Multiple Sclerosis Out‐licensed to Sanofi. Only mAb with MS target and completed Ph‐I study in the US. Global patients are more than 1.5m of which 750,000 patients is in US. Potential market size US$3bn.
GBR‐900 TrkA Antagonist (mAb) Chronic pain
First‐in‐class opportunity with a novel pain receptor for treatment of chronic pain. Ph‐I Tox study is completed. Filing for Ph‐I clinical study in UK is completed. More than 100m patients globally. Potential Pain market is more than US$3bn
GBR‐830 OX40 Antagonist (mAb) Autoimmune disorders First anti‐OX40 mAb. Completed Ph‐I Tox study. Filing for Ph‐1 study in FY15 is completed.
GBR‐1302 HER2 xCD3 biospecific antibody
Oncology (Breast cancer) Presently in pre‐clinical development. Expects to obtain approval for initiations of clinical studies in H1FY16 in US.
In‐licensed
Crofelemer CFTR Inhibitor HIV related Diarrhea In‐licensed from Napo pharma for ROW market (140 countries). Salix launched in US in 2013 with API from Glenmark. Ph‐III completed, approval process on. Global patient 10m.
Adult acute infectious Diarrhoea and Cholera
Results of Ph‐III trial is expected in 2015. Glenmark target patients for this indication as it has larger populations in ROW markets.
Source: Company Data, PL Research
April 01, 2015 14
Glenmark Pharmaceuticals
Outcome of current R&D in ANDAs to be realised beyond FY18E
With estimates of 43% CAGR in R&D expenses during FY13‐17E, Glenmark’s R&D
costs are likely to increase to 10‐12% of sales on the back of its foray in high‐end
ANDA products. We expect 50‐60% of R&D costs to be allocated for limited clinical
development of respiratory and oncology generics, which will benefit the company
FY18 onwards. With its experience of respiratory products in domestic market, the
company plans to foray initially in to key ROW markets followed by US inhaler
markets. We expect the company to begin clinical trials for MDI inhalers in 2016 and
US launch in FY18E‐19. The DPI inhalers are expected to be launched in US in 2020.
The company’s strategy for respiratory product is to enter only those markets where
generics are allowed for automatic switch from patented drugs. In oncology therapy,
the company is expected to utilise IPR from its previous acquisition in Argentina for
foray in to limited competition drugs in US hospital business. With its strategy for
selective products, we expect Glenmark’s pipeline of oncology injectable to increase
to 20 ANDA from the current pipeline of eight ANDAs.
Exhibit 16: ANDA filings of Glenmark
FY12 FY13 FY14 9MFY15
12 18 20 15
Source: Company Data, PL Research
Exhibit 17: Glenmark's Para‐IV opportunities in US beyond FY18
Brand Molecule Therapies US Mkt size
(US$ m)FTF holders
Expected launch
Remarks
Effient Prasugrel CVS 416 Shared FY2019 Strong competition to be on Day‐1 of exclusivity as 15‐16 generics expected.
Alimta Pemetrexed disodium
Oncology 1120 Teva Nov FY23 Expected launch post Teva's sole exclusivity
Bystolic Nebivolol CVS (anti Hypertensive
400 Shared Sept FY22 Case Settled. Glenmark able to launch 3 months before patent expiry along with Hetero, Alkem, Torrent
Vimpat Lacosamide CNS (Anti‐seizures)
350 Shared Mar FY22 Patent Challenge is on in District Court
Banzel Rufinamide Epilepsy 80 Shared NA Patent Challenge is on in District Court
Treanda Bendamustine Oncology 530 Shared NA Glenmark's Shared exclusivity. Patent infringement suit is on.
Source: Company Data, PL Research
April 01, 2015 15
Glenmark Pharmaceuticals
Exhibit 18: Top‐15 respiratory drugs in US which could be target for generic players by FY18
Brands Originator US Sales (US$ m) 2014
Advair Discus GSK 4,813
Spiriva Handihaler BI 3,329
Symbicort Astrazeneca 2,246
ProAir HFA Teva 1,149
Nasonex MSD 1,184
Flovent HFA GSK 1,142
Budesonide Generic 1,039
Xolair Genentech/Novartis 1,034
Combivent Respimat BI 892
Ventollin HFA GSK 811
Qvar Teva 695
Dulera Merck 587
Pulmozyme Genentech 537
Advair HFA GSK 437
Montelukast sodium Generic 314
Source: Company Data, PL Research
Strong capex for niche products/plants to yield beyond FY17E
With major commitment of US$100m investments for US plants over five years and
requirement of inhaler plants for US filing, the company plans for capex of US$100m
in FY15E and US$80m each in FY16E and FY17E. The US plant is expected to produce
oral solid dosages including controlled substances with an initial investment outlay
which is likely to be US$25m each in FY15E and FY16E. There are investments of
US$40m for major expansion in India (mainly for inhaler plant) and maintenance
capex of US$25m are also budgeted in total capex plan for FY15E.
Exhibit 19: Capex Plan to be higher for new plants in US, India
64
76
8480
100
85 85
50
60
70
80
90
100
110
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
(US$ m)
Source: Company Data, PL Research
April 01, 2015 16
Glenmark Pharmaceuticals
Consolidated sales and headline margins to rise along with new approvals and expansions
With 22% CAGR in core sales derived out of organic growth in FY10‐15E, Glenmark’s
achievement in building globally diversified generic and branded generic business is
one of the best in the industry. US generic is expected to contribute 46% and 47% of
incremental revenues in FY16E and FY17E respectively in comparison to 5% in FY15E.
Domestic formulations will maintain average contribution of 22% of incremental
revenues in FY16E and FY17E vis‐a‐vis exceptionally high contribution of 46% in
FY15E. ROW being the third largest contributor in the company, is expected to
contribute in incremental revenues by 25% and 28% in FY16E and FY17E,
respectively, in comparison to 49% in FY15E.
Exhibit 20: Glenmark's build up in revenues (%)
FY13 FY14 FY15E FY16E FY17E
Glenmark Generics (GGL) 46 47 45 45 52
US Generics 34 34 31 33 42
Europe Generics 3 4 4 3 3
LatAM (Argentina) Oncology 1 1 1 1 1
APIs & Co‐mktg 8 9 9 8 7
Glenmark Specialty (GPL) 53 52 55 51 44
Domestic Formulations 26 25 27 25 22
Semi‐Regulatory Market (SRM) 17 16 12 11 10
LatAm (Excl Argentina‐Mainly Brazil & Others) 6 6 12 11 9
Europe (Branded Generics) 4 4 4 4 3
Core Revenues 99 99 100 96 96
Outlicense Revenues 1 1 0 4 4
Total Revenues 100 100 100 100 100
Source: Company Data, PL Research
Exhibit 21: Sales, EBITDA, EBITDA margin
20.1 22.7
20.6 21.9 21.7 23.7
29.5
‐
5.0
10.0
15.0
20.0
25.0
30.0
35.0
‐
20,000
40,000
60,000
80,000
100,000
120,000
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Revenues (Rs m) EBITDA (Rs m) EBITDA margin (%) (RHS)
Source: Company Data, PL Research
April 01, 2015 17
Glenmark Pharmaceuticals
With large contributions of high value US generics and stable revenues of domestic
formulations, we expect 200bps expansion of core EBITDA margin to 24% in FY17E
from 22% in FY14. Core EBITDA will increase at 21.5% CAGR to reach Rs23.7bn in
FY17E from Rs13.2bn in FY14. Core PAT will grow at 18% CAGR in FY14‐17E with PAT
margin expansion of 180bps to 13.7% in FY17E.
Key financial parameters perform as per guidance
With receivables of 120 days and D/E ratio of 0.9x, the company’s key financial
parameters are stable in FY14E‐17E. We expect current debt of US$550m to be
stable in the near term despite annual capex requirement of US$80‐100m. We
expect back‐ended cash flows to reduce leverage of the company post FY17E due to
windfall gain from Zetia exclusivity and out‐license revenues of US$100‐120m. With
adjustment of Rs1.2bn one‐off expenses, Glenmark’s EBITDA margin is expected to
be 21% in FY15E and forecast 23.7% and 29% in FY16E and FY17E, respectively on
the back of 25‐30 approvals (including Zetia exclusivity) in FY16E‐17E. Better cash
flow and expanded margin will also improve return ratios as adj. ROE and ROCE will
increase to 25% and 24% in FY17E, respectively.
Exhibit 22: Net debt to reduce FY17 onwards
19.1 19.2 21.6
24.7
27.9 28.0
23.9
‐
5.0
10.0
15.0
20.0
25.0
30.0
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
(Rs bn)
Source: Company Data, PL Research
Exhibit 23: D/E ratio also to follow the trend in Net debt
0.89x0.79x 0.78x 0.81x 0.82x
0.78x
0.64x
0.00x
0.20x
0.40x
0.60x
0.80x
1.00x
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Company Data, PL Research
Exhibit 24: Receivable days (DSO) to remain stable
141
117106
117 120 120 120
0
20
40
60
80
100
120
140
160
FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Source: Company Data, PL Research
Exhibit 25: Break‐up of Receivable days in key geographies
10090
196
0
50
100
150
200
250
US India ROW
Source: Company Data, PL Research
April 01, 2015 18
Glenmark Pharmaceuticals
Valuations
Peer disparity in R&D valuations: Glenmark’s R&D for NCE is virtually free
While we are positive on the company’s earnings prospect in FY16E‐17E, we find
unfair comparison of Glenmark’s key financial parameters with its peers. Glenmark’s
average annual R&D spent for NCEs/NBEs has been US$40‐50m, while it received
US$200m revenues on milestone payments from out‐license deals since 2004. The
company’s overall R&D cost (including NCEs and high‐end generics) was 10% of sales
in FY14, which is expected to go up to 12% by FY17E. Among its peers, we find Dr
Reddy’s as the only company who has started to spend 10‐11% of sales in FY15 as
R&D costs for high‐end generics and proprietary products and expected to maintain
the trend of R&D costs of 10‐12% of sales till FY17E. Major Indian Pharma companies
allocate either insignificant part of their R&D costs for discovery‐led R&D or conduct
research through hived‐off entity to maintain high EBITDA margin (e.g. SPARC‐Sun
Pharma Advanced Research).
Exhibit 26: Valuation of Glenmark is at heavy discount to peers
US sales (US$ m) FY15E
ANDAs (No.)EBITDA margin
(before R&D)R&D exps PE (FY16) PE (FY17) ROE ROCE
Sun Pharma (excld RBXY) 2,828 130 50.9 6.4 28.3 24.1 22.0 25.0
Dr Reddy's 2,296 72 34.1 11.2 22.3 19.1 20.0 23.0
Lupin 2,155 95 37.0 9.0 31.3 25.9 26.0 36.0
Zydus Cadila 1,355 144 25.3 7.0 23.7 19.2 24.0 21.0
Glenmark 1,063 74 31.7 10.0 18.7 9.9 19.0 20.0
Source: Company Data, PL Research
Hence, comparison of Glenmark’s key financial EBITDA post R&D with peers would
be an unfair assessment of valuation. Among the comparable peers, Dr Reddy’s
trades at PE of 23x and 19x of FY16E and FY17E, while SPARC achieved first time
profit of Rs303m (EPS: Rs1.28) in FY14 post its spin‐off from Sun Pharma in 2006.
SPARC is currently valued at US$1.8bn (a rise of 240% since April 2014).The
company' key financials are: Sales at Rs1.1bn, EBITDA (‐) at Rs0.27bn and EPS (‐) at
Rs1.27 in M9FY15.
Exhibit 27: Brief of SPARC’s financials of few past years
FY10 FY11 FY12 FY13 FY14 9MFY15
Sales (Rs m) 344 584 290 873 1,670 1,130
EBITDA (Rs m) (191) (56) (693) (230) 435 (248)
PAT (Rs m) (216) (85) (722) (225) 303 (301)
EPS (Rs) (1.0) (0.4) (3.5) (1.0) 1.3 (1.3)
Source: Company Data, PL Research
April 01, 2015 19
Glenmark Pharmaceuticals
Glenmark’s pipeline of novel molecules has high potential to generate revenues (as
high as US$1bn) with high probability of risk. The company’s R&D objective of first‐
in‐line products, especially in biologics, will have strong potentials for high value out‐
license revenues. In comparison, SPARC and recently Dr Reddy’s have been investing
in NDDS/NDA drugs which focus on improved technology and delivery systems to
enhance efficiency. With very few successes (such as Cipro XR, Sotret and i) of the
NDDS drugs in US since 2000 (launched by Indian majors), there are multiple risks
involved in R&D of NDDS/NDA products:
(a) Small window of three years exclusivity
(b) Time‐sensitive risk of acceptance among medical practitioners and end users
(c) Acceptance of leading insurance companies/PBMs to gain inclusion in their
formularies which require comparative study to show significant benefits over
existing leading brands/originator drug
(d) Competitive pressure from substitutable generics and branded generics of the
molecule on which the NDDS is derived. This will limit pricing power of the NDDS
products
(e) Upfront costs for promotion (in case of branded NDDS) and maintenance of high
cost sales team in developed markets
Exhibit 28: Strong disparity in R&D valuation is at display between Glenmark, SPARC
Source: Bloomberg, PL Research
While investments in NDDS research remains low, the high underlying risks of
commercial success turn risk‐return matrix unfavourable in many NDDS products.
We see many unsuccessful branded and non‐branded NDDS products in US such as
Sun Pharma’s Doceferez, Venlafaxine XR Tabs, Alembic’s Desvenlafaxine and
Ranbaxy’s Riomet and Ximino. Comparing valuation of SPARC and Dr Reddy’s R&D
potentials vis‐a‐vis its valuations, we believe Glenmark’s huge potentials in NCEs and
biologics has been virtually non‐existent in the current valuation of the company.
‐
50
100
150
200
250
300
350
400
Mar‐14
Apr‐14
May‐14
Jun‐14
Jun‐14
Jul‐14
Aug
‐14
Aug
‐14
Sep‐14
Oct‐14
Oct‐14
Nov‐14
Dec‐14
Dec‐14
Jan‐15
Feb‐15
Mar‐15
Mar‐15
Glenmark Pharmaceutical Sun Pharma Advanced
April 01, 2015 20
Glenmark Pharmaceuticals
Exhibit 29: One year forward Price / Earnings still below average PER
Source: Company Data, Bloomberg, PL Research
Exhibit 30: Glenmark current valuation has yet to show strong earnings potential in FY16E‐17E
Source: Company Data, Bloomberg, PL Research
To derive comparable EPS of Glenmark with peers, we add back (assumed) US$50m
R&D costs of NCE/NBE research post adjustment of tax benefits/shields to core
earnings and estimate adj. EPS of Rs34, Rs67, Rs76 in FY15E, FY16E and FY17E,
respectively. With conservative assumptions of growth in the near‐to‐medium term,
we derive value of the company following SOTP of valuations in FCFF and PER
methodologies. We upgrade our recommendation to ‘BUY’ with increase in TP to
Rs1,186.
18.7
83.7
22.5
18.0
8.20.010.020.030.040.050.060.070.080.090.0
Mar‐05
Sep
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Mar‐06
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Mar‐07
Sep
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Mar‐08
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Mar‐09
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Sep
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Mar‐11
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Mar‐12
Sep
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Mar‐13
Sep
‐13
Mar‐14
Sep
‐14
Mar‐15
P/E (x) Peak(x) Avg(x) Median(x) Min(x)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Apr‐10
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P/E (x) Average (µ) (µ+σ) (µ‐σ)
April 01, 2015 21
Glenmark Pharmaceuticals
Exhibit 31: Revenue Break up
FY12 FY13 FY14 FY15E FY16E FY17E
Domestic Formulation 10,021 13,096 15,105 17,820 21,027 24,602
YoY gr. 18.6% 30.7% 15.3% 18.0% 18.0% 17.0%
LatAm (Branded) 2,869 2,940 3,655 7,679 8,831 10,421
YoY gr. 49.5% 2.5% 24.3% 110.1% 15.0% 18.0%
SRM (incl Crofelemer) 5,926 8,493 9,869 8,038 9,609 11,312
YoY gr. 45.6% 43.3% 16.2% ‐18.6% 19.5% 17.7%
Europe (Branded) 1,976 2,017 2,668 2,702 3,189 3,699
YoY gr. 29.4% 2.0% 32.3% 1.3% 18.0% 16.0%
NCE Outlisence Income 2,535 493 366 299 3,100 4,340
YoY gr. 183.2% ‐80.6% ‐25.9% ‐18.2% 936.4% 40.0%
GPL 23,328 27,038 31,662 36,538 45,755 54,373
YoY gr. 38.4% 15.9% 17.1% 15.4% 25.2% 18.8%
US & EU generics 12,137 16,887 20,270 20,539 27,068 48,023
YoY gr. 45.3% 39.1% 20.0% 1.3% 31.8% 77.4%
Europe (Generic) 1,031 1,707 2,392 2,405 2,790 3,209
YoY gr. 89.7% 65.5% 40.2% 0.5% 16.0% 15.0%
Argentina Onco. (Generic) 142 340 391 430 494 593
YoY gr. ‐64.5% 138.6% 15.0% 10.0% 15.0% 20.0%
API 3,094 3,976 5,353 5,987 6,885 7,849
YoY gr. ‐7.3% 28.5% 34.6% 11.8% 15.0% 14.0%
GGL 16,405 22,910 28,407 29,362 37,237 59,674
YoY gr. 29.9% 39.7% 24.0% 3.4% 26.8% 60.3%
Gross Sales 39,733 49,949 60,069 65,899 82,993 114,047
YoY gr. 34.7% 25.7% 20.3% 9.7% 25.9% 37.4%
Add: Other Operating Rev. 491 19 233 314 339 373
Less: Excise 18 32 250 298 378 443
Net Operating Revenues 40,206 49,935 60,052 65,915 82,953 113,977
YoY gr. 36.3% 24.2% 20.3% 9.8% 25.8% 37.4%
Source: Company Data, PL Research
April 01, 2015 22
Glenmark Pharmaceuticals
Income Statement (Rs m)
Y/e March 2014 2015E 2016E 2017E
Net Revenue 60,052 65,915 82,953 113,977
Raw Material Expenses 18,730 21,093 25,716 33,053
Gross Profit 41,322 44,822 57,238 80,924
Employee Cost 10,261 12,722 15,180 18,236
Other Expenses 17,881 17,784 22,397 29,064
EBITDA 13,179 14,317 19,660 33,623
Depr. & Amortization 2,168 2,616 3,253 3,873
Net Interest 1,886 2,019 2,123 2,227
Other Income 115 455 478 493
Profit before Tax 9,240 10,136 14,763 28,016
Total Tax 1,513 2,046 3,395 6,444
Profit after Tax 7,728 8,091 11,368 21,572
Ex‐Od items / Min. Int. (2,305) (1,260) — —
Adj. PAT 5,423 6,831 11,368 21,572
Avg. Shares O/S (m) 271.2 271.2 271.2 271.2
EPS (Rs.) 20.0 25.2 41.9 79.5
Cash Flow Abstract (Rs m)
Y/e March 2014 2015E 2016E 2017E
C/F from Operations 8,537 1,086 3,224 6,902
C/F from Investing (3,681) (6,359) (5,323) (5,330)
C/F from Financing (2,960) 3,284 3,303 4,260
Inc. / Dec. in Cash 1,896 (1,989) 1,204 5,833
Opening Cash 6,248 8,145 6,156 7,359
Closing Cash 8,145 6,156 7,359 13,192
FCFF 1,863 (2,276) 1,481 6,059
FCFE 6,884 (852) 2,764 7,796
Key Financial Metrics
Y/e March 2014 2015E 2016E 2017E
Growth
Revenue (%) 20.3 9.8 25.8 37.4
EBITDA (%) 28.0 8.6 37.3 71.0
PAT (%) (9.8) 26.0 66.4 89.8
EPS (%) (9.9) 26.0 66.4 89.8
Profitability
EBITDA Margin (%) 21.9 21.7 23.7 29.5
PAT Margin (%) 9.0 10.4 13.7 18.9
RoCE (%) 11.2 12.2 16.7 24.7
RoE (%) 18.9 20.8 27.6 38.2
Balance Sheet
Net Debt : Equity 0.8 0.8 0.6 0.4
Net Wrkng Cap. (days) 47 154 150 146
Valuation
PER (x) 39.4 31.3 18.8 9.9
P / B (x) 7.2 5.9 4.6 3.2
EV / EBITDA (x) 18.1 16.9 12.3 7.1
EV / Sales (x) 4.0 3.7 2.9 2.1
Earnings Quality
Eff. Tax Rate 16.4 20.2 23.0 23.0
Other Inc / PBT 1.2 4.5 3.2 1.8
Eff. Depr. Rate (%) 5.7 5.9 6.6 7.1
FCFE / PAT 126.9 (12.5) 24.3 36.1
Source: Company Data, PL Research.
Balance Sheet Abstract (Rs m)
Y/e March 2014 2015E 2016E 2017E
Shareholder's Funds 29,833 35,983 46,282 66,786
Total Debt 32,670 34,094 35,376 37,114
Other Liabilities (4,488) (4,858) (5,284) (6,106)
Total Liabilities 58,015 65,218 76,375 97,794
Net Fixed Assets 30,357 33,940 35,958 37,355
Goodwill 602 662 728 801
Investments 537 425 425 425
Net Current Assets 26,518 30,191 39,264 59,213
Cash & Equivalents 8,007 6,156 7,359 13,192
Other Current Assets 39,620 40,309 49,498 65,650
Current Liabilities 21,109 16,274 17,594 19,629
Other Assets — — — —
Total Assets 58,015 65,218 76,375 97,794
Quarterly Financials (Rs m)
Y/e March Q4FY14 Q1FY15 Q2FY15 Q3FY15
Net Revenue 16,817 14,778 16,715 16,921
EBITDA 3,598 3,332 3,260 2,565
% of revenue 21.4 22.5 19.5 15.2
Depr. & Amortization 603 651 650 655
Net Interest 464 481 510 513
Other Income 97 126 101 113
Profit before Tax 2,628 2,326 2,202 1,510
Total Tax 19 477 552 363
Profit after Tax 431 1,848 1,651 1,148
Adj. PAT 431 1,848 1,651 1,148
Key Operating Metrics
Y/e March 2014 2015E 2016E 2017E
Generics 23,053 23,375 30,353 51,825
US Formulations 20,270 20,539 27,068 48,023
EU Formulations 2,392 2,405 2,790 3,209
LatAm Formulations 391 430 494 593
APIs — — — —
Branded 31,297 36,239 42,531 49,723
India Formulations 15,105 17,820 21,027 24,602
ROW Formulations 9,869 8,038 9,485 11,002
LatAm Formulations 3,655 7,679 8,831 10,421
EU Formulations 2,668 2,702 3,189 3,699
Source: Company Data, PL Research.
April 01, 2015 23
Glenmark Pharmaceuticals
Prabhudas Lilladher Pvt. Ltd.
3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai‐400 018, India
Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209
Rating Distribution of Research Coverage PL’s Recommendation Nomenclature
45.7%
37.2%
16.0%
1.1%
0%
10%
20%
30%
40%
50%
BUY Accumulate Reduce Sell
% of Total Coverage
BUY : Over 15% Outperformance to Sensex over 12‐months
Accumulate : Outperformance to Sensex over 12‐months
Reduce : Underperformance to Sensex over 12‐months
Sell : Over 15% underperformance to Sensex over 12‐months
Trading Buy : Over 10% absolute upside in 1‐month
Trading Sell : Over 10% absolute decline in 1‐month
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly
DISCLAIMER/DISCLOSURES
ANALYST CERTIFICATION
We/I, Mr. Surajit Pal (PGDBA, CFA, M.Com), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
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