Glenmark Pharmaceuticals Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Revenues declined 8.4% YoY to | 2165.6 crore (I-direct estimate: | 2201.3 crore) mainly due to 33% decline in the US to | 704 crore (Idirect estimate: | 727.5 crore) on the back of high base of gZetia exclusivity in Q1FY18. Europe, on the other hand, grew 35.6% YoY to | 219.8 crore (I-direct estimate: | 186.4 crore). India business grew 7.6% YoY to | 663.3 crore (I-direct estimate: | 690.4 crore) EBITDA margins contracted 842 bps YoY to 16.0% (I-direct estimate: 17.0%) attributable to higher base of gZetia exclusivity. EBITDA...

Maintain BUY with a revised TP of Rs 710 (16x FY20E and Rs 135/sh for pipeline). Affected by lack of lucrative product approvals for the US market and higher R&D; spend, Glenmark pharmas (GNP) reported second consecutive quarter with sub-par profitability. EBITDA declined 41% YoY to Rs 2.9bn and EBITDA margin at 13.5% was down 735bps YoY. Top line decreased 7.2%YoY due to loss exclusivity in gZetia. The US business declined 30%YoY/5%QoQ to Rs 7bn. Reported PAT at ~Rs 1.5bn was up ~600%YoY/60%QoQ supported by forex gains of Rs 640mn (vs loss in 3QFY18).

ff US Biz (31% of Sales): US base business declined by 27.1% YoY to US$109mn due to higher price erosion and large YoY base owing to gZetia contribution. GNP expects price erosion, which stood at 12% in 4QFY18, to remain in FY19E. The Company intends to launch 10-12 products (including limited-competition products) in FY19E. Cumulatively, it filed 193 ANDAs, out of which 62 are pending for approvals (including Para-IV: 26). Indore plant has received...

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...