Glenmark Pharmaceuticals Ltd. share price target

Revenues declined 7.2% YoY to | 2280 crore (I-direct estimate: | 2347 crore) mainly due to 30% YoY decline in the US to | 700 crore (I-direct estimate: | 733 crore) on the back of high base of gZetia exclusivity in Q4FY17. Europe, on the other hand, grew 38.8% YoY to | 319 crore (I-direct estimate: | 264 crore) EBITDA margins contracted 373 bps YoY to 14.3% (I-direct estimate: 18.5%) attributable to lower gross margins (65.6% in Q4FY18 vs. 68.4% in Q4FY17) and higher employee cost. EBITDA declined 26.4%...

India business and new launches in the US to drive growth Glenmark Pharma Ltd (GNP) is an India-based pharmaceutical company with commercial presence in more than 60 countries across the globe. The company has...

Maintain BUY with a revised TP of Rs 780 (16x Dec-19E and Rs 135/sh for pipeline). Glenmarks (GNP) 3QFY18 performance was sub-par, as pricing pressure in the US business, higher R&D; and forex losses weighed on profits. While YoY comparisons are not apt on account of the exclusive launch of gZetia in 3QFY17, the top-line declined ~2% QoQ to Rs 21.7bn (in-line with estimates). EBITDA margin disappointed at 13.4% (vs expectation of 18%), down ~260bps QoQ. Gross margins declined ~220bps QoQ on the back of an inferior business mix, and R&D; costs remained elevated (12.9% of sales vs 12% QoQ). PAT was ~Rs 935mn, dragged down ~54% QoQ by forex losses of Rs 480mn (vs gain in 2QFY18).

US generics comprise ~44% of total revenues and have grown at a CAGR of ~17% in FY13-17. Total USFDA filings as on date are 188. So far, the company has received approvals for 130. Out of the 58 pending ANDAs, ~26 are Para IV applications. Key therapies in the US, going forward, will be oncology, dermatology and respiratory. The company expects to file 20-25 ANDAs. We expect US sales to remain subdued in FY17-20E to | 2907 (CAGR -8%), mainly due to higher base, delay in product launches and acute pricing pressure in base business....

Q3FY18 revenues reduced by 13.1% YoY and 2.3% QoQ, above our forecast by 2.3%. EBITDA margin of 14.6% were lower than our estimates of 19.4%, mainly on the back of continuing pain in the US market and higher other expenses. PAT of Rs935mn, -79.7% YoY and -54.3% was taking into account writebacks and deferred tax asset which is applicable in all companies. Given the continuous pain in the US market, plus challenging environment with competition in gMupirocin, higher base business erosion and muted growth trajectory, we have revised downwards our sales/EBITDA/EPS estimates by...

Beyond gZetia . Budding niche product pipeline Ex US overall revenue growth was at 16% YoY and is expected to grow over 15% YoY going forward. The management has guided for better gross...

Q2FY18 revenues increased by 1.5% YoY lower than our forecast by 5.6%. EBITDA margin of 17.4% were lower than our estimates of 19.7%, mainly on the back of sales mix and higher expenses. PAT of Rs2bn, -8.6% YoY, was lower by 19.6%. For FY18, Glenmark has guided for the US business to have a run-rate of USD125mn+, however, with overall EBITDA margins of 21-22%. We are confident of Glenmark signing one out-licensing deal to help reduce debt. Key Highlights and Investment Rationale Pain continues for the US franchise...

ff FY18 Guidance: The Management expects sales (including gZetia) to grow by 6% YoY, while pegging EBITDA margin and gross margin at 21-22% and 68%, respectively. R&D; spend is pegged at 11-13% of sales. GNP plans to launch Ceylon Pharma's product (SalmaxgAdvair/...

Maintain BUY with a revised TP of Rs 1,000 (18x Sep-19E and Rs 135/sh for innovative pipeline). Glenmarks (GNP) 2QFY18 performance was slightly below expectations. The overall top-line grew 2% YoY to Rs 22.2bn. While a sequential decline in the US was expected on account of the loss of exclusivity of gZetia, US$113mn for the quarter was below our expectations. The EBITDA margin came in at 16%. There were one-time bonuses of Rs 1.1bn paid during the quarter, adjusted for which the margin would have been 21% and ~100bps ahead of our estimates. PAT was ~Rs 2bn, down ~9% YoY.

growth to pick up; high debt remains an overhang Net sales increased marginally by ~2% YoY (-5% QoQ) to INR22.2b (4% miss). EBITDA declined ~11% YoY to INR3.6b (2% beat), with the margin coming in at 16% (-230bp YoY, -740bp QoQ). Employee expenses included annual employee bonus of ~INR1.1b in 2Q. Adjusted for this, EBITDA came in below the previous quarter's level (note that 1QFY18 included Zetia sales with >80% GM). According to management, the improvement in margins...