International operations have seen smart growth and added to the overall profit margins.
The performance of Glenmark Pharmaceuticals has been positively affected by improving overseas operations. Sales in its key US generics market have achieved six per cent growth, after posting a decline in eight consecutive quarters.
The US market contributed around 26 per cent to the company’s net revenue of around Rs 696 crore during the quarter. According to analysts at Elara Capital, “We believe the event is important, as it’s a precursor to the company’s return to robust growth trajectory in the US.”
The core business earnings before interest, tax, depreciation and amortisation (Ebitda) improved 100 basis points to Rs 144.5.1 crore due to a turnaround in US generics and better growth traction in Latin America. Glenmark has developed a portfolio of low-competition niche generics in the last two years, which will drive growth in the near to medium term with larger stability, say analysts.
After restructuring of product portfolio and operations in the Latin American business, the company has achieved 21 per cent (annual) growth in branded formulations (in Brazil) and 10 per cent growth in the oncology business. The geographical expansion in this market, other than Brazil and Argentina, is one of the main contributors to growth, say analysts.
In the domestic formulations market, the company achieved 17 per cent growth on the back of its prominent brands in dermatology, cardiology and respiratory segments. Employee costs, however, shot up as the company made additions to its field force – 200 in India and 100 worldwide.
Analysts expect a better performance, as the company has been getting a slew of approvals in the US. This will improve volume growth and help the company maintain margins. Analysts expect a rise in the research and development expenses, as the company looks to enter new markets. Another factor will be the working capital management, which may strain net earnings, say analysts.
