Glenmark: Going global with generics

Having picked up seven brands from Actavis, the Rs.1,978 crore Glenmark Pharmaceuticals now has the products and the marketing support to roll out its generics business in Europe.

The seven brands should post a combined sales of $15 million in the current year; of these Cital (anti-depressant) and Lamotrix (anti- epileptic) contribute about 50 per cent. With this, Glenmark now has a presence in three of the top ten CEEMA markets "� Czech Republic, Poland and Romania.

The Polish pharma market is particularly lucrative and, according to research firm BMI, is estimated at $ 4.9 billion (Rs. 19,600 crore) currently with the potential to grow to about $6.1billion (Rs. 24,400 crore) by 2011.

Glenmark has now been able to establish its generics business across the globe"� it has a presence in the US, Latin America, Australia, Asia and now Europe. In the US, it is one of the successful Indian generics firms with a turnover of approximately Rs. 540 crore, almost one-fourth of its overall turnover.

To achieve this, it has made a string small acquisitions and though small "�they have added to the product range and turnover. Glenmark is also working towards becoming a global research company by acquiring specialty businesses in the US and EU markets as a platform to launch proprietary products.

The current acquisition, analysts believe, may be slightly dilutive to earnings in FY09 though it should start contributing to the bottom line next year. Glenmark's operating margins expanded by a smart 580 basis points in FY08 to 40.6 per cent.

The company is expected to close FY09 with revenues close to Rs 2,600 crore and a net profit of Rs 750 crore. The earnings per share should grow by about 19-20 per cent over the next couple of years.

At the current price of Rs.606, the stock trades at 21 times estimated FY09 earnings and is not cheap. However, the company should do well despite chances of disappointments from discovery-driven products.