RESEARCH INSIGHT 2

GLENMARK
PHARMACEUTICALS
(BSE: 532296)
(NSE: GLENMARK)

PHARAMACEUTICAL INDUSTRY

EQUITY RESEARCH REPORT

BY
SRINIVAS NANDIKANTI

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GENERAL OVERVIEW:
GPL is primarily focused on building a global Generics, Specialty and OTC business in the
therapy areas of Dermatology, Respiratory and Oncology. It also has strong
regional/country specific presence in other therapeutic areas like diabetes, cardiovascular
and oral contraceptives. Glenmark Pharmaceuticals Limited (GPL) has 3 key core business
verticals, each having different characteristics and strategic priorities- API Business,
Formulation Business and Innovation R&D Business. For the third quarter of FY 2019-20,
Glenmark’s consolidated revenue was at Rs. 27,355.61 Mn (USD 385.64 Mn) as against Rs.
25,550.45 Mn (USD 355.87 Mn) recording an increase of 7.07%. For the nine months ended
December 31, 2019, Glenmark’s consolidated revenue was at Rs. 78,734.80 Mn (USD
1,120.78 Mn) as against Rs. 73,019.94 Mn (USD 1,049.59 Mn) recording an increase of 7.83%.

Q3 FY 20 FINANCIAL RESULTS SPOT PRICE AS ON 21st MARCH 2020

Q3 FY20 Q2 FY 20 QOQ GR % At 7:17 PM
REVENUES 2735.56 2815.04 -2.82% BSE: 349.85
EBITDA 473.04 531.23 -10.95% NSE: 350.15
PBT 270.99 347.3 -21.97%
PAT 190.84 255.54 -25.32%

REVENUE & NET PROFIT IN RS CRS VALUATION METRICS

Market Capitalization 9873
100% (Rs Cr)
475.24
924.99 803.37
1108.75
743.05 P/E 7.68
95%
Industry P/E 36.22
90% Book Value (Rs) 423.23
6651.65
85%
10240.49 9194.47
9223.05
7669.58 Dividend (%) 200
EPS 45.6
80% Price/Book 0.83
FY19 FY18 FY17 FY16 FY15
Dividend Yield (%) 0.57
TOTAL INCOME NET PROFIT Face Value 1

52 WEEK LOW & HIGH

595

168 350

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SHARE HOLDING PATTERN:

A Promoters holding
marginally changed to
46.62% as of Mar 2020 qtr.
FII/FPI have decreased their
holdings by 1.65% of
holdings in Mar 2020 qtr.
Number of FIIs/FPIs holding
stock fell by 54 to 280 in Mar
2020 qtr. Mutual Funds
holding marginally changed
to 3.74% as of Mar 2020 qtr.
Number of Mutual Funds
holding stock fell by 13 to 13
in Mar 2020 qtr.

From above shareholder pattern it can be

seen that the Glenmark Pharmaceutical is
operated professionally rather than
family operated.

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MANAGEMENT OF THE COMPANY:

NAME: Mr. Glenn Saldanha, CMD

BACKGROUND: Mr. Saldanha joined Glenmark in 1998 as Director and took over as Managing Director and
CEO in 2000. He transformed Glenmark into a truly global organization with revenues of over a billion
dollars (US). Under his leadership, Glenmark has evolved from an Indian branded generics business into a
research-driven and innovation-led organization. Mr. Saldanha’s vision is to discover, develop and take to
market India’s first innovative drug for the world.

NAME: Mrs. Cherylann Pinto, Director -Corporate Affairs

BACKGROUND: Mrs. Pinto has been the Director of Corporate Affairs at Glenmark since October 1999 and
is an executive member of the Board. With over 30 years of experience in the pharmaceutical field, she
currently heads the Company’s Corporate Communications, Insurance, IT, Admin, HR and CSR functions.
She had set up a pharmaceutical company where she served as the Managing Director from 1989 to 1999
before joining Glenmark.

NAME: Mr. V. S. Mani, Executive Director & Global CFO

BACKGROUND: Mr. Mani leads the organization’s worldwide finance operations and secretarial function,
including global accounting, financial reporting, tax and treasury. He has over 26 years of rich industry
experience across treasury, taxation, accounting, financial planning and analysis, secretarial, legal, audits,
risk management and investor relations. Prior to joining Glenmark in 2017, he was the President Finance
at the Bhartiya Group. He has also held the position of the Chief Financial Officer at Cipla.

NAME: Mr. Rajesh V. Desai, Non-Executive Director

BACKGROUND: Mr. Desai is a Non-Executive Director at Glenmark Pharmaceuticals Ltd. He has over 35
years of work experience and was the Executive Director and Chief Financial Officer of Glenmark until
2016. He led the Finance, Legal and IT functions and with his strong Finance background, he contributed
significantly to the growth story of Glenmark.

NAME: Mrs. B. E. Saldanha, Non-Executive Director

BACKGROUND: Mrs. Saldanha is a Non-Executive Director and a member of the promoter group of
Glenmark. Prior to this, she was the Director for Exports and managed Glenmark’s international
operations from 1982 to 2005. During her 23-year tenure with the organization, she was responsible for
developing and growing the Company’s export business.

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STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS (SWOT) ANALYSIS:
STRENGTHS
Growing presence in the international generics
market: Glenmark has a growing presence in the US
and other regulated markets, which accounted for
49% of revenue in fiscal 2017 and about 46% in the
first six months of fiscal 2018. The US business
revenue increased substantially from Rs 723 crore in
fiscal 2010 to Rs 2420 crore in fiscal 2016, driven by
the company's focus on niche therapeutic segments
and products with low competition.
Strong position in the chronic-therapeutic
segments: In the domestic formulations market,
Glenmark is ranked 13th as per IMS MAT (moving
annual total) September 2017. It has 6 brands in the
top 300 brands as per IMS MAT September 2017.
The domestic market accounted for 26% of revenue
in fiscal 2017 and 29% in the first six months of fiscal
2018.
Moderate financial risk profile: The financial risk
profile is moderate, and expected to improve, albeit
only gradually. Stretched working capital cycle and
sizeable capital expenditure (capex) have meant
continued high reliance on debt.
OPPORTUNITIES
In the coming years, Glenmark intends to maintain
its leadership in dermatology and continue to build
brands. There is a huge scope to tap dermatology
segment.
In the next few years, it is going to launch Ryaltris,
under a global brand. Since its geographical
footprint is currently concentrated on the South-
East Asian and South Asian markets where growth is
being driven by healthcare reforms. In future, it can
foray into the large, untapped markets of Asia that
offer significant growth opportunities.
Going forward, it is intending to stay the course on
strategy of launching a combination of vanilla and
complex generics in market, seeking opportunities
of limited competition and/or the first-mover
advantage wherever possible, while also pushing
ahead with our goal of emerging as a value-added
specialty pharmaceutical company.
Revolutionizing diabetes management in India:
Glenmark becomes the first company to launch
novel, globally researched SGLT2 inhibitor
‘remogliflozin’ in India
WEAKNESSES
Large working capital requirement: Glenmark's
working capital cycle is stretched due to a significant
presence in emerging economies. Gross current
assets (GCA) were high, relative to peers, at 276
days as on March 31, 2017. Though GCAs have
reduced from around 300 days as on March 31,
2015, they exceed those of other large Indian
pharmaceutical companies.
High R&D expenditure primarily towards new
molecule entities (NMEs) and differentiated
generics: R&D expenditure has been higher than
that of many peers because of focus on new
molecules and differentiated generics. The company
has signed out-licensing deals and has received
cumulative revenue of more than USD 200 million
since 2004 (calendar year). Excluding non-core R&D
assets, Glenmark has a pipeline of 10 NMEs and
specialty generics/biosimilars as of September
2017.
Exposure to intensifying competition and regulatory
risks
THREATS
The Company operates in highly competitive
markets globally and faces competition from local
manufacturers. Significant product innovations,
technological advancements or the intensification
of price competition by competitors may materially
and adversely affect the Company’s revenues.
Pharmaceutical products are subject to price
controls or pressures and other restrictions in many
markets, around the world. Some governments
intervene directly in setting prices.
Many of the world’s largest economies, including
the major markets in which the Company operates
and financial institutions have recently faced
extreme financial difficulty, including a decline in
asset prices, liquidity problems and limited
availability of credit. Due to the economic
uncertainty in emerging markets there has been a
huge devaluation of the currency in certain
geographies in which the Company operates.
Certain geographies have imposed restrictions on
the imports as well as the remittances outside the
country.
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COMPETITOR ANALYSIS:

With its current market capitalization,

Glenmark, falls under the midsize
company’s segment where it mainly
competes with Alkem labs, Glaxosmi
Pharma, Piramal Enterprise. Ajanta
Pharma and Natco Pharma can be
considered as immediate competitor.
Ajanta Pharma is a specialty
pharmaceutical company engaged in
development manufacture and
marketing of quality finished dosages
in domestic and international markets.
Natco Pharma Limited is a vertically
integrated and R&D focused
pharmaceutical company engaged in
developing manufacturing and
marketing of finished dosage
formulations (FDF) and active
pharmaceutical ingredients (APIs). The
company's focus is primarily on niche
therapeutic areas and complex
products.

CONCLUSION:
The Analysis done above shows that the company is majorly a research driven one which is
actively involved in the discovery of new molecules both NCEs (new chemical entity) and NBEs
(new biological entity). The shareholding pattern shows that the company is operated
professionally and led by management & leaders who joined in early years and cultivated
culture. It is the first pharma company in India to get approval from DCGI to conduct clinical
trials of Favipiravir antiviral tablets for the treatment of COVID-19 patients. With its current
strengths and opportunities, Glenmark pharmaceutical can surely come up solution for COVID
and expand its market share in the mid-size segment

SOURCES:

➢ Glenmark Investors presentation ➢ Money control

➢ Annual Reports ➢ Business Standard

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