Glenn Saldanha, chairman and managing director of Glenmark Pharmaceuticals, has created a new revenue-earning model for the Indian pharmaceutical sector through molecule-outlicensing deals. Since 2004, the company has outlicensed about seven drug molecules to multinationals and achieved revenues of $210 million. He speaks to Reghu Balakrishnan on signing more deals, research and development pipeline, and how Glenmark is tapping the US generic market. Edited excerpts:
Glenmark has out-licensed a handful of molecules in the past. How stable is the business?
Clearly, Glenmark’s model is heavily predicated around out-licensing as far as the R&D side goes. Over the years, we have got around $210 million (Rs 1,119.7 crore) of cash by out-licensing our innovation, clearly ahead of what any other company has established. So, that remains our business model. Going forward, you will see further out-licensing deals and further licensing income. So, the model remains intact. While continuing to persist with the out-licensing model, we will simultaneously build capabilities to do late-stage development R&D work as well.
You have seven out-licensing deals since 2004. But, why is that none of the molecules has shown any success so far?
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Drug discovery is fraught with risks and failures are a given. But the important thing is it is addressing the critical area of global unmet medical needs. The next financial year is important for us, as we will be getting crucial data points for some of our molecules in the pipeline. Some of these results, if positive, are expected to trigger out-licensing activities over the next 12 months.
Paragraph IV filings worth $10 billion have been submitted. What’s the update?
A key driver for our US business, the largest business for Glenmark in terms of sales, has been our niche Para IV strategies. Glenmark has close to 20 Para IV ANDAs (abbreviated new drug applications) pending approval with the US-FDA (Food and Drug Administration). We launched Malarone and Cutivate in the last financial year. Based on litigation settlements, we will be launching Hydrocortisone Butyrate Cream, by the end of 2013-14. In addition, we have Ezetimibe (Zetia) which is expected to be launched by December 2016.
Which are the areas of focus in the US market?
Our strategy for the US market has always been focused towards capturing niche segments with limited competition, such as dermatology, hormones, controlled substances and modified release categories. In third quarter of the current fiscal, we have seen the US business grow in excess of 35 per cent and going ahead also, we expect good growth coming out of this market.
No acquisitions were made in the recent past...
Mergers and acquisitions are not part of the company’s strategy at least for the next two-three years. We will be focused on organic growth. We are growing at a healthy growth rate of over 20 per cent CAGR (compounded annual growth rate) and we are confident of maintaining this. Also, our focus is to generate more free cash for the business.
How do you plan reducing high debt of Rs 1,924 crore?
The business continues to generate free cash. The free cash that the business will generate over the next two-three years will all go towards debt repayment. So, debt should continue to come down as we go forward on a much stronger Ebitda (earnings before interest, taxes, depreciation, and amortisation) base.
Are you expecting any of the NCEs to hit market soon?
The approval for Crofelemer has paved the way for Glenmark becoming the first Indian company to launch a NCE (new chemical entity) across multiple geographies. Glenmark has the rights to market and distribute Crofelemer in 140 emerging markets, while Salix Pharma has the rights in developed markets. The estimated potential peak sales for Glenmark in 140 emerging markets for HIV associated diarrhoea is $80 million.