Glenmark Fails To Reap U.S. Windfall; Considers Out-Licensing Drugs In FY18

Glenmark Pharmaceuticals Ltd.’s revenue grew at a slower pace than estimated in the three months ended March on lower-than-expected sales from the exclusive launch of a generic cholesterol drug in the U.S.

The company launched Zetia on December 12 in a partnership with U.S.-based Par Pharmaceutical. The companies enjoy 180-day exclusivity, during which Glenmark had estimated $200-250 million in revenue. The company, however, has revised the guidance to the lower end of the range.

Glenmark’s net profit rose 53 percent to Rs 183.76 crore in the fourth quarter of 2017-18 over the year-ago period, it said in a stock exchange filing on Thursday. That was way below Rs 580 crore consensus estimate of analysts tracked by Bloomberg. Net sales rose by 6.5 percent to 2,457.2 crore year-on-year, failing to reap any windfall from Zetia.

Glenmark could focus on boosting its sales by out-licensing drugs. “There’s a strong possibility we will out-licence some products in financial year 2017-18,” Glenn Saldanha, managing director and chief executive officer, Glenmark Pharmaceuticals, told BloombergQuint over the phone.

The company also faces pricing pressure in the U.S. Prices fell by “around 15-odd percent in the fourth quarter. This year (FY18), we anticipate the price erosion in the base portfolio (excluding new launches) will be in the range of 10-15 percent”, Saldanha said. He, however, does not see prices falling by more than 15 percent.

Despite lower prices in the U.S. and accounting for new launches expected in FY18, the company expects to maintain operating margins at 23 percent.

The company’s domestic business recorded a growth of 6.9 percent in the fourth quarter, and Saldanha expects a better growth from the current quarter.

On the impact of government’s push for generic medicines, Glenmark said it’s business as usual at least for now and it would take a “long long time to make that transition (from branded to generic drugs)”.

While the company didn’t give any forecast, Saldanha reiterated the intention to bring down debt over the previous financial year.

The company’s research and development expenses will remain at around 11-12 percent of sales in FY18 and it targets filing for 15-20 drug applications (ANDAs) in the U.S.

Shares of Glenmark dropped the most in over seven years on Friday after the fourth quarter earnings missed forecasts. They were trading 14.5 percent lower at 12.40 p.m.