Release Date: February 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Glenmark Pharmaceuticals Ltd (BOM:532296, Financial) recorded a 2.9% YoY growth in consolidated revenue for the first nine months of FY24.
- The company outperformed the overall industry in India with a 12% growth in secondary sales for Q3 FY24.
- Strong growth in Europe operations with a 29% YoY increase in revenue, driven by both branded and generics business.
- Successful launch of new products in India, including Zita DM and Lirafit, which are expected to enhance market presence.
- Significant expansion in the injectable portfolio in North America, with new product launches expected to positively impact future sales.
Negative Points
- Consolidated revenue from operations declined by 16% YoY for Q3 FY24 due to a one-time impact on the India business.
- North America business saw a 9% YoY decline in revenue, attributed to a lack of significant new product launches in preceding quarters.
- Forex loss of INR16.8 crores and a INR48 crore impact due to hyperinflationary accounting in Argentina affected financial results.
- Exceptional items for the quarter included legal costs associated with US litigation and remediation costs at an Indian manufacturing site.
- Gross debt stood at INR4,953 crores, with net debt at INR3,523 crores as of December 31, 2023, indicating a significant debt burden.
Q & A Highlights
Q: Can you elaborate on the India business restructuring and its impact?
A: The restructuring aimed to correct inefficiencies in the distribution channel by consolidating stock points and reducing inventory. This will improve working capital management and margins. The impact was a one-time event, and normal sales should resume in Q4. The India business is expected to grow at around 10%-12% annually.
Q: Why form the Ichnos Glenmark Innovation (IGI) alliance?
A: The IGI alliance consolidates oncology assets from Glenmark and Ichnos under one umbrella, creating synergies and reducing R&D costs. This restructuring is part of a broader strategy to focus on innovation and improve EBITDA margins.
Q: What is the status of the Monroe Plant?
A: The Monroe Plant has completed remediation work and is ready for FDA inspection. Process validation batches have started, and commercial production is expected to begin post-inspection. Two products are expected to be commercialized in FY25, with more to follow.
Q: What are the expected benefits from the India business rationalization?
A: The rationalization has already improved working capital by about INR530 crores. Future secondary sales reported by IQVIA will align more closely with Glenmark's reported sales, leading to better inventory management and working capital efficiency.
Q: What is the commercial arrangement for the new injectable products in the US?
A: Glenmark has exclusive distribution agreements with certain injectable players. The US business strategy focuses on building the injectable and respiratory portfolios, with significant contributions expected from these areas in FY25.
Q: What is the market potential for Ryaltris?
A: Ryaltris is expected to generate sales of around $80 million next year, with potential peak sales being substantial. The product aims for a market share of 15%-20% in the allergic rhinitis and respiratory market.
Q: What are the timelines for oncology innovation milestones?
A: Three oncology assets (2001, 1442, and 54276) are expected to read out in FY25. Partnerships are planned for these assets, which have blockbuster potential.
Q: What is the expected working capital level for FY25?
A: The working capital level is expected to be around 100 days.
Q: What are the expected India sales for next year?
A: The current run rate is about INR1,000 crores per quarter, expected to grow by 10%-12% next year.
Q: What is the company's policy on dividend distribution post-Glenmark Life Sciences stake sale?
A: The dividend policy will be discussed at the year-end Board meeting. The company aims to be net cash positive by the end of the year, with the proceeds from the stake sale used to repay debt.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
