The stock is likely to be re-rated on strong prospects and the successful trial of Crofelemer
Glenmark Pharma’s Crofelemer, a first-in-class anti-diarrhoeal drug, has successfully completed Phase-III trials for HIV-related diarrhoea. With this, Glenmark is close to becoming the first Indian company to develop an original novel chemical entity (NCE) to treat diseases.
Glenmark says Crofelemer, likely to be launched in about 140 countries in two years, will open at least a $80-million opportunity. Glenmark has already seen strong domestic growth on the back of 24 product launches in two years which contribute 25 per cent to revenues.
The branded formulations segment grew 19.2 per cent at Rs397 crore in the September quarter, while domestic formulations grew 21.5 per cent to Rs224 crore. The growth was spread evenly, with contributions from both small and large brands.
The robust growth (19 per cent) in domestic formulations in the first half of the financial year looks sustainable as secondary sales have grown 30 per cent, according to the ORG (a pharmaceutical research firm) data.
Generic sales grew 26.2 per cent to Rs250.4 crore, boosted by the US business. Glenmark’s second launch on exclusivity pertaining to Tarka generics (anti-hypertension tablet) contributed around Rs20 crore, likely to continue till 2013-14, as filings by competitors are yet to be seen. An out-of-court settlement for generics of Zetia (expected to contribute from 2011-12) has also been made with the innovator and Glenmark plans three-four launches upon exclusivity.
With promising prospects, a re-rating is on the cards, say analysts at Elara Capital. For the current financial year, revenues are estimated to grow 22.3 per cent to Rs2,949 crore, with net profit up 31.4 per cent at Rs426 crore. At Rs365, the stock trades at 23.4x2010-11 estimated earnings.
