Glenmark Pharmaceuticals, which separated its generics and new drug discovery businesses into two companies late last year, says it aims to grow on the lines of the $6.4-billion Swiss drug-maker Novartis.
Basel-based Novartis was formed in 1996 by merging two Swiss chemical and life sciences companies — Ciba (formerly Ciba-Geigy) and Sandoz. While Sandoz is predominantly a generic company, Novartis AG, its parent, focuses on innovative drugs.
"There are not many successful models in the pharmaceutical history where two entirely different businesses of new drug discovery and generics complement each other for the growth of a company," said Glen Saldanha, managing director and chief executive officer of Glenmark Pharmaceuticals. In a few months, Glenmark will hit the capital market to raise funds for the company's expansion plans, he said.
"Glenmark's model is one of the most viable models of growth for pharmaceutical companies, where business strategies, requirements and challenges are different for generics and new drug business," said Ranjit Kapadia, head of pharmaceutical research group with Prabhudas Liladhar.
"In India, while most leading Indian generic companies hived off its research and development to separate business, Glenmark hived off its generics business. This shows its confidence and growth in new drug research," the Mumbai-based brokerage firm's executive said.
Saldanha said the immediate goal before his team is to record a Rs 2,600-crore turnover this year. "Organically, we should reach at least $700-750 million (about Rs 3,000 crore) revenues this year," says Saldanha, whose company clocked a turnover of Rs 1,978-crore last year.
As part of the re-organisation, Glenmark spun off its non-branded generics international business into a separate company, Glenmark Generics (GGL), in November 2007. Similar to the Novartis/Sandoz strategy, the split envisages the parent focusing on innovative drug research and branded drugs and GGL its conventional generics and bulk drug sales business.
More From This Section
Leading Indian generic companies follow different models for growth. Ranbaxy remains a predominantly generic company with some innovative research. Dr Reddy's Laboratories has scale and large reach in generics. But its attempts in the field of innovative drug research are yet to reap any returns.
Generics business requires continuous scale and cash inflows where as innovative research is a high risk, long-term business. It is difficult to do both simultaneously once it reaches a particular stage and that is why companies are separating these businesses, " said Sarabjit Kaur Nagra, vice-president (research), Angel Broking.
However, analysts also caution that attempting to concentrate on scaling up of both the businesses of generics and innovative research simultaneously could cause management issues. They cite that Novartis and Sandoz entity was born only after both growing up independently as billion dollar companies.
New drug research
Currently, Glenmark has 13 molecules at various stages of development, the largest pipeline by any Indian pharmaceutical company. Its lead molecule, Oglemilast (GRC 3886), a novel oral drug in development for Chronic Obstructive Pulmonary Disorder (COPD) and for asthma, is now in advanced second phase of clinical trials. The drug was outlicensed to Forest Labs of US for further development.
"Results so far are encouraging and we hope to commercialize it by 2010 and this will be a unique or first-in-class drug with better results and safety," says Saldanha.
He expects the drug to become a blockbuster with global sales of $2-3 billion at peak sales. Currently the asthma/COPD market is valued at about $10 billion, mainly dominated by six to seven inhaler brands.
Its second molecule under development, GRC 8200 for Type II diabetes, was outlicensed to Merck, but the company returned the molecule last year due to some changes in its drug development plans. It is currently undergoing trials in South Africa and India and will enter into the last lap of clinical trials, next year.
"This will be a fourth in class drug during commercialisation and we hope to earn about $1 billion at peak sales, Saldanha says. The company would soon announce a new partner for further development, he added.
Its third molecule, GRC 6211 for osteoarthritis, dental pain and neuropathic pain, is currently in the second phase of trials. It was outlicensed to Eli Lilly and Company, in one of the largest outlicensing deals in Indian pharmaceutical space. Its experimental drug for rheumatoid arthritis, inflammation and multiple sclerosis, GRC 4039, entered the first phase of clinical trials recently.
Glenmark has also invested heavily into development of new biologic drugs (NBE) and has so far in-licensed two products under development. One of them — GRB 500 — for multiple sclerosis and inflammation, will soon enter into clinical trials. "Three experimental drugs will enter into clinical trial stage in 2008-09 and our strategy is to have at least 5-8 molecules into clinical trials at any point of time in future," says Saldanha.
Generics business
"This business needs scale and reach and that is what we are trying now," says Saldanha. Generics business now contribute one fourth revenues (Rs 540 crore) to the Mumbai-based drug maker's Rs 1,978-crore turnover. The company had acquired small companies in Europe in the past to push its products to Europe and other emerging markets.
These included Laboratorios Klinger in Brazil, Bouwer Bartlett -- a sales and marketing company in South Africa -- and Medicamenta, a pharmaceutical marketing and manufacturing company in the Czech Republic. "We will look at similar small to medium companies and brands to create front ends in Europe and other emerging markets," he said.
But Glenmark Generics plans a big presence in the US, the largest generic and prescription market in the world, by buying a medium to large specialty drug maker with branded products, manufacturing facilities and large field force in that country.
"This will also help us to push our products when our own molecules reach the markets," reasons Saldanha. GGL markets about 35 products in the US and another 40-45 drug marketing applications are pending with the American drug regulator.