However, there were a few misses due to cross-currency factors, leading to lower-than-expected sales from the rest of world (RoW) and European markets. Europe and RoW contribute 16-17 per cent to sales. RoW sales declined 25.2 percent year-on-year (y-o-y) and 28.1 per cent sequentially, while Europe grew 12.3 per cent y-o-y and fell 54.8 per cent sequentially.
The US, which contributed nearly a third to revenue, registered 14 per cent growth. The company had posted flat 0.6 per cent growth in the US during FY15 and the management expects the geography to grow 18-20 per cent in FY16. Thus, with $88 million sales in the June quarter, the firm has to achieve average quarterly revenues of $106 million in the next three quarters and the management remains confident of this.
The first quarter saw four launches, registering a $35-50 million a year opportunity. There are more approvals expected, with the management indicating a few unannounced growth drivers from the September quarter onwards. Glenmark’s manufacturing facilities that supply to the US have been successfully inspected by the US Food and Drug Administration.
The domestic market, which contributes 29 per cent to revenue, has seen a growth of 19 per cent. It is expected to remain in the 18-20 per cent range, driven by the launch of diabetes control drug Teneligliptin. It is the first to gain approval and has priced brands Ziten and Zita Plus at a 55-60 per cent discount to the existing gliptins (anti-diabetic agents).
The stock, which saw a 52-week high of Rs 1,105 on July 17, has lost some steam and is trading at Rs 993 levels. There was some disappointment as Glenmark lost the case for the launch of skin treatment product Finacea, which was to be launched in FY17. The company plans to appeal against the decision. Consistent launches and a pick-up in the US are key to meeting its forecast, say analysts at HSBC.
Analysts such as those at IDFC who have a target price of Rs 1,100 or more, believe the US growth, combined with the steady domestic formulation sales, should help mitigate near-term challenges from forex volatility in emerging markets.