GLENMARK PHARMACEUTICALS LTD.

GENERAL OVERVIEW :
Glenmark Pharmaceuticals Ltd was incorporated on November 18th, 1977. The company is
actively involved in the discovery of new molecules both NCEs (new chemical entity) and
NBEs (new biological entity). It is engaged in the business of development, manufacture and
marketing of pharmaceutical products both formulation and active pharmaceutical ingredients
to regulated and semi-regulated markets. Its branded generics business has a significant
presence in markets across emerging economies including India. The company has 17
manufacturing facilities across US, India, Argentina, Czech Republic and Switzerland. The
generics business services the requirements of developed markets like the US and Western
Europe.
MANAGEMENT AND BOARD OF DIRECTORS :

1. Chairman & Managing Director : Glenn Saldanha.

As Chairman & Managing Director of the Company, Mr. Saldanha oversees all operations of the
organization. During his tenure, he transformed Glenmark into a truly global organization with
revenue over a billion dollar and commercial presence in over 80 countries. Under his leadership,
Glenmark has evolved from an Indian branded generics business, into a research-driven and
innovation-led organization. Mr. Saldanha’s vision is to discover, develop and take to market
India's first innovative drug for the entire world.
2. Executive Director and Global Chief Financial Officer : Mr. V. S. Mani.
Mr. V. S. Mani is an executive member of the Board of Directors and is also the Global Chief
Financial Officer of Glenmark Pharmaceuticals Ltd. He is responsible for the company’s
worldwide finance operations and secretarial function, including global accounting, financial
reporting, tax and treasury. He has over 25 years of rich industry experience across treasury,
taxation (direct, indirect & international), accounting, financial planning & analysis, secretarial,
legal, audits (internal & statutory), risk management and investor relations.
3. President, Global Quality : Dr. Darshan Makhey.
Dr. Darshan Makhey is President, Global Quality at Glenmark Pharmaceuticals Ltd. In this role
he has the critical responsibility of protecting and enhancing Glenmark’s reputation for high-
quality and reliable products across a variety of disease states. Dr. Makhey has over 20 years of
experience in the industry. He has served in a variety of strategic leadership and executive roles,
with increasing responsibility across multiple organizations including quality and compliance.
4. President, India Formulations & Middle East & Africa Region : Mr. Sujesh
Vasudevan.
 Mr. Sujesh Vasudevan is Glenmark’s President, India Formulations and the Middle East &
Africa (MEA) regions. He has overall responsibility for the company’s generics and branded
pharmaceutical businesses across India, Middle East and Africa.
5. President, North America : Mr. Robert Matsuk.
Mr. Robert Matsuk is President of North America at Glenmark Pharmaceuticals Ltd. He has
overall responsibility for the company’s generics and branded pharmaceutical business across
North America.
SWOT ANALYSIS OF THE COMPANY :
❖ STRENGTHS :
1. Extremely productive R&D efforts.Strong NCE pipeline with three compounds in
Phase II clinical trials.
2. Received licensing fees of $117m for three molecules.
3. Built-up skills in NCE research overlast 6 years.
4. One of the fastest growing companies in the sector (CAGRgrowth 31% over FY
04-07 vs. 22%for the sector).
5. built-up strong franchises in the US generic market in a short duration.
❖ WEAKNESSES :
1. Negative free cash flow of aboutRs7bn from FY04-07, primarily because of
aggressive capex between 2005-07 (Rs7.8bn).
2. Currency appreciation as exports contributes 55% of Glenmark's Revenues
(excluding license fees.
3. Negligible presence in the European Markets.
4. High margin and fast growing lifestyle segment contributes just 1/5 of its total
domestic revenue.
❖ OPPORTUNITIES :
1. Innovative restructuring will enableGlenmark to build both the businesses.
2. Likely out-licensing deal for Oglemilastfor European markets.
3. Focus on Biologics research ~ huge potential going forward.
4. A pipeline of 11 compounds comprising 6 NCEs and 5 NBE.
❖ THREATS :
1. Risk of failure/ delays in NCE research.
2. Acquisition and integration risk.
3. Pricing pressure in the regulated generic markets.
4. Execution risk in the base business.
COMPETITIVE ANALYSIS :
❖ ABBOTT INDIA : Formerly known as Knoll Pharmaceuticals Limited, Abbott India
Limited (AIL) is a subsidiary of Abbott Capital India Limited in which the latter holds
about 69% stake. It is involved in the discovery, development, manufacture and
marketing of pharmaceutical, diagnostic, nutritional and hospital products in India. AIL
offers products in the areas of pain management and gastroenterology primarily under the
'Brufen', 'Digene', and 'Cremaffin' brand names. In addition, it offers various solutions in
the areas of thyroid, obesity, diabetes, and benign prostatic hyperplasia.

CURRENT VALUATIONS :
GLENMARK ABBOTT GLENMARK
PHARMA INDIA PHARMA/
ABBOTT
INDIA
P/E (TTM) x 15.1 57.5 26.3%
P/BV x 1.9 17.0 11.4%
Dividend % 0.5 0.4 128.6%
Yield

EQUITY SHARE DATA :

GLENMAR ABBOTT GLENMAR

K PHARMA INDIA K PHARMA/
Mar-19 Mar-19 ABBOTT
INDIA
High Rs 712 8,834 8.1%

Low Rs 484 5,458 8.9%

Sales per Rs 349.6 1,731.1 20.2%

share
(Unadj.)
 Earnings per Rs 32.8 211.9 15.5%
share
(Unadj.)
Dividends Rs 2.00 65.00 3.1%
per share
(Unadj.)

❖ PFIZER INDIA :
Pfizer India is a 71% subsidiary of the world's largest pharmaceuticals company Pfizer
Inc. Pfizer derives a larger share of its revenues from the pharmaceuticals division (81%).
The company also has presence in the animal health (13%) and clinical development
operations (6%) segments. In the animal health segment, Pfizer plans to capitalize on its
parent's brand. It also carries out clinical trials on behalf of its parents.

CURRENT VALUATIONS:
GLENMARK PFIZER GLENMARK
PHARMA PHARMA/
PFIZER
P/E (TTM) x 15.3 35.9 42.7%
P/BV x 2.0 6.1 31.9%

Dividend % 0.5 0.6 92.2%

Yield

EQUITY SHARE DATA :

GLENMARK PFIZER GLENMARK
PHARMA INDIA PHARMA/
Mar-19 Mar-19 PFIZER
High Rs 712 3,840 18.5%
Low Rs 484 2,080 23.3%
 Sales per Rs 349.6 455.0 76.8%
share
(Unadj.)
Earnings per Rs 32.8 93.8 35.0%
share
(Unadj.)
Dividends per Rs 2.00 22.50 8.9%
share
(Unadj.)

CONCLUSION :

Glenmark wants to become an innovation-driven pharma company and is one of the first Indian
companies where research and development (R&D) expenses on innovative pipeline is equal to
that of generic drugs. Glenmark’s new drug research pipeline is also better than that of other
Indian pharma counterparts. However, valuation in this counter is low compared to its peers
because Glenmark is still facing teething troubles with its innovative launches (the CRL
incident with Ryaltris is one example) and therefore, the performance on its speciality business
is below the market expectations.
Due to high R&D spend and new product launch expenditures, Glenmark is not able to bring
down its net debt of Rs 3,425 crore and this is another concern that is keeping valuation low in
this counter. Glenmark plans to bring its debt down by selling certain assets and also minority
stake its innovation company. Any announcement on this front will be a trigger for this counter.
In addition to the US and Europe, Glenmark is also scaling up its operations in emerging
markets like Brazil, Mexico, Russia and eastern European countries.