glenmark pharmaceuticals ltd. analyst meet glenmark ... meet/132296_20050630.pdf · (non executive...

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Glenmark Pharmaceuticals Ltd.Analyst Meet

April 2004Glenmark Pharmaceuticals Ltd.June 2005

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Table of Contents

Pharmaceuticals – The India Advantage 3

Glenmark: Background, Strategy, Outlook 8

Business Segments 16

Domestic Formulations

Research and Development

Active Pharmaceutical Ingredients

International Formulations

Infrastructure and Management 28

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Creation of theIndian Pharma

Industry

Creation of theIndian Pharma

Industry

Early 70’s to early 90’sLack of product patent laws

– Indian pharma industry started reverse engineering formulations for India launch

– Developed core synthesis capabilities for APIFERA (Foreign Exchange Regulation Act): Led to reduced MNC activity in IndiaSmall Scale Industry exemptions: Fragmentation of industry (Top 20 formulators control only 30% of revenues)

The 90’s onwards…India market growth dwindled and companies were looking for additional growth opportunitiesExports to less regulated markets grew rapidlyPatent expiry in regulated markets created “Generics”Creation of “Generics” threw up API supply opportunities

The India Advantage

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The India AdvantageThe Current Indian Opportunity Spans all parts of the Pharma Value Chain

REWARD

Semi-regulatedAPIs

Semi-regulated BRANDED GENERICS

US API

USGENERICS

SPECIALTY

BRANDRISK

Exceptional chemistry skills for analogue research

Established formulation development skills

Low cost manufacturing

base

Strong reverse engineering and manufacturing

capabilities


base


base

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Today India is known for Generics and API; but a focus on New Drug Research has emerged, driven by external variables

Pre-1990’s 1990-till date

The India Advantage

R&D was focused on immediate revenue

generation -APIs and Generics

Fledgling investments were made in new drug

discovery

India’s inherent factor advantage has not changed much over timeStrong chemistry skills, some skills in biologyDeep pool of skilled technical manpowerLow cost human resources

However, changing macro-variables have driven and enabled their redeployment to basic research

Impending respect for Product PatentsPipeline limitations in generics businessExpected over-competition in the regulated marketsReturn of some scientists who were engaged in basic research abroad

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The India AdvantageIndicators of the change: In a short time, India has seen 8 deals in the NCE space

Indian Firm Partner Details

Dr. Reddy’s Novo Nordisk DRF 2593 (diabetes)

Novartis DRF 4158 (diabetes)

Novo Nordisk DRF 2725 (diabetes)

Ranbaxy Bayer Cipro XR (NDDS)

Schwarz RBx2258 (BPH)

Torrent Novartis AGE breaker (diabetic)

Glenmark Forest (for North America only)

GRC 3886 (asthma/COPD)

Teijin Pharma (for Japan only)

GRC 3886 (asthma/COPD)

Source: Industry articles

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Table of Contents









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Background

History : ▪ A 28 year old company▪ Went public in 1999 on Indian Bourses

Identity/Scope : • Integrated company operating in Research, Manufacturing and Marketing of Pharmaceuticals

• Business interests span formulations and bulk actives

:

:

Market Capitalization

: • ∼ USD 700 mn (as at May 2, 2005)

Global Footprint

▪ Headquartered in Mumbai, India▪ Operate in over 60 countries across the Globe▪ About 50% of FY 2005 revenues from outside India

Financial Performance

• Results FY 2005– Consolidated Revenues of $ 140 million– Consolidated Profit after Tax of $ 25 million

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BackgroundBackground of the Promoters

Gracias Saldanha

(Non ExecutiveChairman)

Gracias Saldanha

(Non ExecutiveChairman)

Founder of the Company; 40 years of Pharmaceuticals experience

Started career as a Medical Representative with Franco Indian Pharma in 1959Joined Abbott Labs. in 1964 Switched to become Regional Manager in E.Merck in 1970Joined Aristo Pharma as Sales Manger in 1976

Left Aristo as Marketing Manager to start Glenmark in 1977Tenure in Glenmark spans from 1977 – 1998

Glenn Saldanha

(Managing Director and

CEO)

Glenn Saldanha

(Managing Director and

CEO)

B-Pharm ( Bombay University ) and M.B.A. (Leonard Stern School Of Business, New York University)Worked at Eli Lilly USA as part of the global marketing teamSubsequently worked in the Pharma practice of Pricewaterhouse Coopers USA as a management consultant. Worked with various large MNCs such as Rhone Poulenc Rhorer, Bristol Myers Squibb, Astra Merck, Smith Kline Beecham, Johnson & JohnsonJoined Glenmark in 1998 as a Director, involved in developing corporate strategy and product marketing networkPromoted to CEO in 2001

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Shareholding Pattern (6th May, 2005)

55%

18%

19%

3%

2%

1% 1% 1%

COMPANY PROMOTERS

RESIDENT INDIVIDUALS

FOREIGN INSTITUTIONALINVESTORBODIES CORPORATES

INDIAN FINANCIALINSTITUTIONSMUTUAL FUNDS

NON RESIDENT INDIANS

OTHERS

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Four segments, clear strategyDomestic Formulations Research and Development

Establish leadership in the domestic pharmaceutical mkt.Dominate key specialty segments

Build strength in chronic/lifestyle diseases

Invest in R&D for sustained growth post-GATT

Create/capture IP value by patenting generic improvements

Develop NCEs for alliances with MNCs for clinical development

Active Pharmaceutical Ingredients International Formulations

API integration to create/capture value throughout product chain

Partner with global generic companies for supply opportunities

Global distribution network for marketing generics and patented technologiesExploit regulated market opportunity through the India cost advantage

Promote branded generics in LRMs

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Significant revenue growth

CAGR ~ 33%

Consistent Delivery on Strategy till Date

2000 2005

Business diversification: Glenmark has performed well in target segments

USD 33 Mn

USD 140 Mn

98%

2%2000

50%

12%

25%

13%

India FormulationAPI IndiaExportsNCE

2005

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Consolidated Performance in FY 2005

(In USD Mn) FY 2005 FY 2004(Unaudited) (Audited)

86.971.215.710.90.811.79.3

8.2

Revenue (Operations) 139.9 61%103.636.328.51.229.725.1

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Gth %

Expenditure 46%

EBITDA (Operations) 131%

EBT (Operations) 161%

Other Income 50%

PBT 154%

PAT 170%

Basic Earnings per share (in cents) 156%Note: Exchange rate assumed at 43.8 Rs/USD

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Increasing overseas revenue and licensing revenues from NCE pipeline

Outlook: Strong Revenue/Profit growth

2005140

2006 2007262 CAGR ~ 37%Revenues 200

In USD Mn*

50%36% 32%

12%

8% 8%

25%35% 45%

14% 20% 15%

2005 2006 2007

NCEInternational (API+Dosage)API IndiaIndia Formulation

50 60 CAGR ~ 60%

Business Mix

Net Profits 25

In USD Mn (Assumed exchange rate of ~44 INR/USD)

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Table of Contents









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Organized by Business Unit For Sharp FocusBusiness Segments

CEO

APIDomestic Formulati

onsR&D Semi-

Regulated Lat. Am US EU

Coverage in today’s

Presentation


R&D API International Formulations

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Domestic Formulations Strategy for the domestic formulations business has yielded goodresults

Divisional approach for better focus

Concentrate on specialty segments

Capture first-mover advantage

Differentiate products

Consistently outperformed the Indian market in sales growth

Diversified portfolio mix

Maintained old strong-holds such as dermatology

Built a strong position in several other specialty segments – Gynaecology, Life-style, Pain etc

New launches and combination therapies have driven revenues in past

Built position from Rank 40 in 1998 to 23 in 2005 – putting us among the top 15 Indian firms

Reorganized field force (6 divisions) and launched new division to improve performance through focus

Performance in the domestic business

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Research has been Integral To Glenmark’s Growth Strategy Research and Development

Strong focus on three areas: New Drug Discovery, Formulation Research, Process Research (APIs)

2002-03 2003-04 2004-05(Unaudited)

5.03% 2.12%

1.93%

1.27%

5.32%

0.80%

0.70%

6.53%

2005-06(Projected)

Discovery 3.2% 2.50-3.00%

Formulations 0.4% 3.50-4.00%

API 0.82% 1.50-2.00%

TOTAL 4.42% 7.50-9.00%

R&D op-ex at 5.3% of revenues– projected to increase

Research Spend(as a

percentage of total revenue)*

Research Spend(as a

percentage of total revenue)*

•Internal Figures, and includes revenue expenditure on research activities•Figures for 2005-06 are on consolidated business revenue projections (excluding licensing deal payments)

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Glenmark has succeeded in building a good NCE portfolio in a relatively short time

Segments were chosen carefully

End-Game was clear

• Sunrise, Chronic segments chosen for their potential ROI: Diabetes, Asthma and Obesity

• Targets in these areas were also carefully chosen to suit analogue research

• Limitations in ability to commercialize new drugs was recognized

• End-Game of out-licensing preclinical/Phase I candidate was always well-defined


• Cutting edge research centre was built• Scientists returning from USA were hired• Well-paid and provided “softer” motivations• Reasonable operating budgets were sanctioned

Team was well resourced

Quick decision-making

• Top management’s direct involvement regularly• No delays in critical decisions

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Research and DevelopmentFour exciting programs currently: Asthma/COPD and Diabetes programs have progressed the most

Therapeutic Area Target Status

Asthma/COPD PDE4

• GRC 3886 completed Phase I in UK• Excellent safety profile exhibited• Sep 04: Licensed to Forest Labs for N. America• Apr 05: Licensed to Teijin Pharma for Japan

Diabetes DPP-IV

• GRC 8200 in preclinical testing• Long acting, oral, once daily drug; promising

results in preclinical testing• Likely to be filed for Phase I in Q1-Q2 FY2006

CNS (Alzheimer’s, Multiple Sclerosis) PDE4

Topical Inflammation Ind. (Atopic

Dermatitis, Uveitis)PDE4

• In preclinical testing• One of these is expected to enter Phase I by

end FY 2006

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Our Asthma/COPD lead GRC 3886: Concluded landmark deals for North America, Japan, considering partners in EU/Japan


• Cumulative milestones of up to $ 190 mn • Received $ 10 mn upfront, and first milestone of

$ 10 mn in April 2005*• Phase II to commence by early 2006• “mid teen” royalties on commercial launch;

additional revenues on API supplies

DevelopmentForest deal in Sept 2004 for North America

• Cumulative milestones of up to $ 53 mn • Royalties and API revenues in excess of

first quartile of net sales on commercial launch

DevelopmentTeijin deal in April 2005 for Japan

Plan going forward:• Discussions on for Europe :

Internal target to collaborate in FY 2006

• Glenmark will retain the marketing rights to the rest of the world and will commence developing a rollout strategy for the rest of the world

• Patent life expected to continue till 2024 - long potential revenue stream after launch

* Income recognized in Q4, FY 2005

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Research and DevelopmentGRC3886, has successfully completed Phase I clinical trials in UK

Early Findings In Phase I Single And Multiple Dosing Studies

GRC 3886

Highly bio-available

Long half-life with a resultant potential for once-daily dosing regimen

No Emesis at highest dose tested

No Cardiac Toxicity at highest dose tested

Surrogate proof of concept indicated through high TNF-Alpha inhibition; also

indicating potential in Rheumatoid Arthritis

Phase II to commence in early Calendar Year 2006 in

North America

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Research and DevelopmentWe also invest in research to support our generic/API businessResearch Team

Regulated Markets Semi-regulated Markets (including India)

Formulation Development and Novel Drug Delivery Systems

• Team of 90 scientists• Completed filing 12 patents, 6 ANDAs in

FY 2005• Dedicated development labs for oral solids,

liquids & dermal semi-solids; separate scale-up labs

• Developed Proprietary Platform Control Release Technology

• Targeting submission of 22-24 ANDAs1 and 6-8 dossiers in EU in FY 2006

• Team of 60 scientists• Separate drug

development facility at Sinnar near Nasik.

• Current focus on immediate release products, new drug delivery systems and technology for semi-regulated markets

Process Chemistry for APIs

• 50 Scientists, 6 research labs at New Bombay• Over 40 products commercialized over these last three year• Filed 13 DMFs, 1 COS and 3 EDMFs till date• Non-infringing processes protected by patents (~20 patents till date)• Planning for 14 DMFs and several EDMFs/COS in FY 2006

1: Including 8 dossiers being developed for a deal with KV Pharmaceuticals (US)

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Current Status

Current Status

Initiated API business 4 years ago

Product portfolio of over 40 APIs in over 45 countries

Have filed 13 DMFs/1 COS/3 EDMFs in FY 2005

An important revenue generator and growth driver for the firm

Also supports the generic/branded generic business

Supplying APIs to the India and LRM formulations

Supporting the filing of ANDAs and Marketing Dossiers in EU

Started API exports to regulated market like US & West Europe in 2004 and expecting to start business in EU in 2005

Have a USFDA approved facility at Ankleshwar (Gujarat, India); also 2 other non-cGMP plants

Active Pharmaceutical IngredientsOur API business is a valuable part of our business revenues as also a source of competitive advantage in the formulation business

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International FormulationsOperate in Less-Regulated markets as a “branded generic” player

(A) Medium term : Greater revenue sustainability and growth (B) Long term : Fit with NCE Strategy, Build marketing skills/infrastructure

Brazil/Latin America Other Semi-regulated Markets

Acquired Klinger Labs (March 2004)Employs about 170, over 90 in fieldAcquisition benefits to Glenmark:

Good local brand nameEntry vehicle to Latin America21 registrations in BrazilANVISA approved formulation plant

Currently filing products developed in India for Brazil, acquired a local brand

Operates in 59 countries (Asia, Africa, CIS/Russia)“Branded generics” model, over 240 Medical RepsLeading Indian presence in Africa: 30 of 54 markets “Quality” revenue growth – lower price pressures, brand/doctor support leading to greater sustainability

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International FormulationsQuickly building up presence in regulated markets of USA and EU

Regulated Markets – US and EU

Established US subsidiary Glenmark Pharmaceuticals Inc USA (GPI), in 2003 and EU headquarters - Glenmark Pharmaceuticals (UK) Ltd in 2004

Multiple tactics being executed in the US. Those initiated till date include:

− Build development skills and initiate cash flows: KV Pharma

− Develop products and file under own label: 6 ANDAS till date, 14 ANDAs planned for FY 2006

− Acquire/in-license ready registrations to augment pipeline: e.g. Clonmel, Interpharm, Konec

− Build marketing front-end

− Augment basket through product tie-ups: E.g. Shasun

Concentrating on development of niche products for EU markets and implementing strategies for partnering and creating alliances in the EU

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Infrastructure and ManagementOur efforts are sustained by adequate investments in infrastructure…

Domestic formulationFormulation development laboratory in SinnarWHO-GMP facility in Nasik for solid orals, liquids, creams and powders New facility initiated at Baddi (HP); commissioning Aug 05

APITwo WHO-GMP plants at Sholapur/Kurkumbh US FDA plant at AnkleshwarSix process chemistry labs in new Bombay

International formulationsA WHO-GMP plant (Nasik)A USFDA/EU approvable plant (Goa)An ANVISA approved plant (Brazil)Formulation development labs for US and EU in new BombayFormulation development labs for RoW at Sinnar

Research & DevelopmentState of the art research facility at new Bombay with dedicated labs, animal house etc for NCE research Patent attorneys on roll (India, USA)

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Infrastructure and Management…and driven by a professional, global management team

Name ResponsibilityGlenn Saldanha CEO

A.S. Mohanty Dir (Domestic formulations)

Rajesh Desai Dir (Fin/IT/Legal)

Terrance Coughlin President (US Operations)

Ailton Wiliczinski CEO (Brazil Subsidiary)

Avadhut Sukhtankar

Sr. VP (Operations)

K. Anand Sr. VP (Regulatory Affairs and QA)

Name Responsibility

V.S. Mani VP (Finance)Dr. Vijay Soni Global Head (IPM)

Arun Narayan Head (EU Generics)

Vithal Dhamankar VP (Semi Regulated Markets -Formulations )

Alind Sharma VP (HR)

Dr. V. Swaroop Head (New Drug Discovery)

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Thank you

glenmark pharmaceuticals ltd. analyst meet glenmark ... meet/132296_20050630.pdf · (non executive...

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