RESEARCH

INSIGHTS

GLENMARK PHARMACEUTICALS
24th September, 2020
Amreta Saha
RESEARCH INSIGHTS

TABLE OF CONTENT

Company Overview 3
Key Performance Indicators 4
Shareholding Pattern 5
Board of Directors 6
Competitor Analysis 8
SWOT Analysis 10
Conclusion & A Way Forward 13
RESEARCH INSIGHTS

Company Overview
Glenmark Pharmaceuticals Limited was incorporated in November 18th, 1977. It is
a leading integrated research-based, global pharmaceutical company. The Company
is engaged in the development of new chemical entities (NCEs) and new biological
entities (NBEs). Its segments are India, United States, Latin America, Europe and
Rest of the World (ROW).
Our branded generics business has a significant presence in markets across emerging
economies including India. It has approximately seven molecules, over two NCEs
and approximately five NBEs in various stages of pre-clinical and clinical
development. It is focused on developing and marketing branded and generic
formulations. It focuses on manufacturing products across therapeutic areas of
dermatology, respiratory and oncology. Its active pharmaceuticals ingredients (API)
business spans over 80 countries, including regulated markets of the United States,
Europe, Japan and Canada.
Its products are primarily marketed in the United States and Western Europe. It has
offices in over 50 countries, and operates approximately 20 manufacturing facilities
in over five countries. It operates over five research and development (R&D) centres.
52 Week Low/High (in Rs.)

168 572.70

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Key Performance Indicators

Revenue (Rs Crore) Profit After Tax (Rs Crore)

FY 20 10,641 FY 20 776
FY 19 9,865 FY 19 925
FY 18 9,194 FY 18 804
FY 17 9,223 FY 17 1,109
FY 16 7,670 FY 16 743

An increase of 7.86% compared to A decrease of 16.1% compared to

previous year. previous year.

Net Worth (Rs Crore) RoCE (%)

FY 20 6,070 FY 20 23.73
FY 19 5,605 FY 19 26.19
FY 18 5,163 FY 18 27.21
FY 17 4,492 FY 17 40.29
FY 16 3,629 FY 16 33.69

An increase of 8.3% compared to A decrease of 9.4% compared to

previous year. previous year.

Basic EPS (Rs) Net Debt to Equity Ratio

FY 20 27.50 FY 20 0.80
FY 19 32.78 FY 19 0.79
FY 18 28.49 FY 18 0.90
FY 17 39.29 FY 17 1.05
FY 16 26.47 FY 16 1.10

A decrease of 16.10% compared to An increase of 1.27% compared to

previous year. previous year.

Balance Sheet (Rs Crore) Geographical Revenue (%)

India
FY 20 14,685 14%
34% North
FY 19 13,289 14% America
Latin
FY 18 12,595
6% America
FY 17 11,764 Europe
31%
FY 16 10,193 ROW

An increase of 10.50% compared to

previous year.
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Shareholding Pattern

Historical Promoters' holding

Shareholding Summary for
in Glemark Pharmaceuticals
Glemark Pharmaceuticals (%)
(%)
46.68%
46.62%
46.50% 46.54% 46.54%

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Promoters'
46.62%
53.38%

Public
Historical Public holding in
Glemark Pharmaceuticals (%)
53.52% 53.50%
53.46% 53.46%
53.38%

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Stock Performance

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Board of Directors
Mr. Glenn Saldanha
Chairman & Managing Director
Joined Glenmark as Director in
1998 and took over as Managing
Director and CEO in 2000. Under
his leadership, Glenmark has
evolved from an Indian-branded
generics business into a research-
driven and innovation-led
organization.
Mr. Rajesh V. Desai
Non-Executive Director
With over 35 years of work
experience and was the Executive
Director and CFO of Glenmark
until 2016. He led the Finance,
Legal and IT functions
Mrs. Cherylann Pinto
Exec. Director-Corp Services
Joined as the Director of
Corporate Affairs at Glenmark
since October 1999 and is an
executive member of the Board.
With over 30 years of experience,
she currently heads the company’s
Corporate services, Insurance, IT,
Admin, HR and CSR functions.
DR. Brian W. Tempest
Non-Executive Director
Has been working in the
pharmaceutical industry for the
last four decades. He has
managed healthcare businesses
in North America, South
America, Europe, Africa, the
Middle East, Australia, China,
Japan and India
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Mr. V.S. Mani
Executive Director & Global CFO
Joined Glenmark in 2017, he’s
leading the organization’s worldwide
finance operations and secretarial
function, including global
accounting, financial reporting, tax
and treasury. He has over 29 years of
experience across treasury, taxation,
accounting, FP&A etc.
Mr. Bernard Munos
Non-Executive Director
Advises organizations on being better
innovators. He serves on the advisory
council of the National Center for
Advancing Translational Sciences
(NCATS), is a member of the
National Academy of Medicine’s
Forum on Drug R&D and
Translation.
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Board of Directors

Mr. Sridhar Gorthi Mrs. B.E. Saldanha Mr. Milind Sarwate

Non-Executive Director Non-Executive Director Non-Executive Director

He is a partner in the Mumbai office
of Trilegal. His areas of expertise
include M&A, joint ventures,
private equity and venture capital.
Apart from representing several
international clients on M&A in
India, he has also advised Indian
companies about outbound M&A
transactions in jurisdictions, such
as the UK, the US etc.
She is a member of the promoter
group of Glenmark. Prior to this,
she was the Director for Exports
and managed Glenmark’s
international operations from
1982 to 2005. During her 23-year
tenure with the organization, she
was responsible for developing
and growing the company’s
export business.
He is the Founder and CEO of
Increate Value Advisors LLP, a firm
that facilitates organizations and
individuals to discover, develop and
deliver business and social value. He
has over 33 years of experience in
Finance, HR and Strategy in groups,
such as Marico and Godrej.

Mr. D.R. Mehta Ms. Saira Ramasastry

Non-Executive Director Non-Executive Director

He was a civil servant for almost She has over 20 years of

four decades with experience in
administration and management of
public affairs. He joined the IAS in
1961.
experience in the Life Sciences
industry, &the Founder and
Managing Partner of Life
Sciences Advisory, LLC.
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Competitor Analysis
Point of Comparison Glenmark Cipla GSK
Pharmaceuticals

MCap 5,812.67 34,104.38 21,095.78

(Rs in Crore)
PAT 775.97 1,546.98 212.45
(Rs in Crore)
P/E 7.49 22.26 191.58
P/B 0.96 2.16 11.46

Current Ratio 1.65 2.66 1.75

Quick Ratio 1.13 1.67 1.27
Cash Ratio 0.27 0.23 1.06

Net Profit 7.29% 9.03% 6.59%

Margin (%)
ROE 13% 10% 11%

D/E 0.95 0.23 0.08

D/A 0.39 0.15 0.05

Total Asset Turnover 0.76 0.72 0.92

• Glenmark Pharmaceuticals is a Mid Cap company among its peers. Although,

it’s maintaining good margins among its competitors. It can be inferred that
the company is doing well financially.
• If we compare the P/E ratio, then the value is lower than the industry average
(28.81x), it’s a value stock. This implies that the company is undervalued
because its stock price trade lower relative to its fundamentals.

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• P/B ratio of less than 1 is considered a good investment opportunity,

Glenmark’s is slightly lower than the competitor’s average (4.86x) and even
its less than 1.
• Also, it’s ROE is higher than its peers. This implies even though the P/B ratio
is less than 1, the company is able to give good returns to its shareholders &
able to generate good return on its assets.
• The company’s current ratio around 1.7-2, is pretty encouraging for a
business. It suggests that the business has enough cash to be able to pay off its
debts.
• Quick ratio of 1.13 is pretty good, means it can instantly get rid of its current
liabilities.
• The cash ratio is also less than 1, which implies that company doesn’t have
enough cash to cover its short term obligations. The company is not utilizing
its assets to generate enough cash.
• Glenmark has a moderate Asset Turnover Ratio compared to its peers

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SWOT Analysis
STRENGTHS
• Operating cost control leads to beat in EBITDA: Other expenses declined
to 23.4.0% of revenue in 1QFY21 (vs 29.5%/29.0% in 1QFY20/4QFY20) due
to savings in indirect costs & SG&A expenses even though employee cost was
on higher side at 21.7% of revenue (vs 21.0%/18.9% in 1QFY20/4QFY20),
resulting in EBITDA margin expansion of +567bps/+356bps YoY/QoQ.
• Growth in Net Profit with increasing Profit Margin (QoQ): In addition to
improvement in EBITDA margin, reported Net profit (+73.0%/+15.3%
YoY/QoQ) was supported by a one-time gain of INR 28 crores (account of
gain from transfer of intimate hygiene brand VWash and reimbursement of
onetime costs). Exceptional gain in 4QFY20 was INR 32.9 crores. Adjusting
for one-time gains, Adj. Net Profit grew 53.9% YoY (+20.6% QoQ). Adj. Net
Profit thus improved 332bps/287bps YoY/QoQ.
• Return on Capital Expenditure: Glenmark Pharmaceuticals Ltd is relatively
successful at execution of new projects and generated good returns on capital
expenditure by building new revenue streams.
• Zero Promoter Pledge: Glenmark Pharmaceuticals Ltd has zero promoters’
pledging, thus showing full confidence of the promoters in the company.
• Strong R&D pipeline with 24 potential Para IV: Glenmark invested ~INR
173.5 crores in Ichnos Sciences for the quarter compared to INR 190 crores
invested in 1QFY20. During the quarter, company filed three ANDA
applications with the USFDA, and plans to file an additional three
applications in the next quarter. Glenmark’s marketing portfolio through June
30, 2020 consists of 164 generic products authorized for distribution in the

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U.S market. The Company currently has 44 applications pending in various

stages of the approval process with the USFDA, of which 24 are Paragraph
IV applications.

WEAKNESS
• Revenues remained flattish in Q1 FY21: Muted growth reported in most
key geographies amid Covid impact and currency headwinds
• Low Cash Ratio: The cash ratio is also less than 1, implies that company
doesn’t have enough cash to cover its short term obligations. The company is
not utilizing its assets to generate enough cash.
• Weak Free Cash Flow: Glenmark Pharmaceuticals Ltd has weak free cash
flows, that is, less cash from operations has been generated to pay off its short-
term liabilities. This signals short-term problems and a need for more capital.
• Subdued Performance in US Markets: Despite lower base, there is muted
Y-o-Y growth mainly due to the stoppage of Ranitidine and sharp decline in
dermatology portfolio, especially Mupirocin.

OPPORTUNITIES
• Emerging Economy: India is an emerging market, which offers a better
market opportunity for generics than it does for researched drugs.
• Venture into new markets: The company can increase its investments in the
budding markets, to push expansion in the global economy.
• Taxation policy: It can significantly impact the way of doing business and
can open new opportunity for established players such as Glenmark
Pharmaceuticals Ltd to increase its profitability.

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THREATS

• Suppliers: The bargaining power of the suppliers has increased over the years
with the decrease in the number of suppliers, which means the costs of inputs
could increase for the company, thus decreasing the profitability.
• High competition: High competition, new technological developments in
India by domestic giants, within the industry pose a threat to as customer
attracted to this new technology can be lost to competitors, decreasing
Glenmark’s market share in the industry.
• Exchange Rates: As the company is operating in numerous countries, it is
exposed to currency fluctuations especially, given the volatile political
climate in the number of markets across the world.

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Conclusion & A Way Forward

In a landmark development, Glenmark has developed and manufactured the anti-
viral Favipiravir for the treatment of mild to moderate SARS-CoV-2 infection. In
June 2020, Glenmark became the first in India to receive regulatory approval under
an accelerated review process for the restricted and emergency use of FabiFlu®
against mild to moderate COVID-19. They are also in the process of studying
Favipiravir in combination with another anti-viral, Umifenovir, as a potentially more
effective treatment for SARS-CoV-2 infection.

Glenmark implemented a host of measures to facilitate and protect employees

reporting to work. This included putting more buses on the road to ensure adequate
social distancing during commutes, providing protective gear and hand sanitizers in
buses and on site, sanitization of common areas thrice a day, among other things.

Coming to the year under review, in 2019-20, Revenues grew 7.86% to approx 1.5
billion USD. Indian business continued to perform strongly with 15% growth rate.
Glenmark is one of the fastest growing companies in the Indian pharmaceuticals
market. Among the highlights of the year was the rapid acceptance of Remogliflozin
etabonate, our novel, globally-researched SGLT2 inhibitor for Type 2 diabetes, by
the medical community. The coming months and years will see Glenmark launch
more niche generics and injectables in the US and accelerate filings for new products
in the market.

Europe will continue to be a focus market for Glenmark with a number of respiratory
products slated for launch over the next few years. In Latin America, Brazilian
subsidiary grew strongly on the back of respiratory products in-licensed from a
multinational partner.

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As a part of themove from vanilla generics to specialty products, Glenmark’s first

proprietary speciality product Ryaltris™ Nasal Spray for seasonal allergic rhinitis
is on course to being launched in global markets. Following this, company has
already signed licensing deal to manufacture Ryaltris™ in China, Australia, New
Zealand and South Korea and is working to close partnerships in various other
markets, including the European Union where an application for approval is
pending.

While challenges of pricing and competition persists in the global generics market,
the firm focuses on quality and compliance, so that patients access high -quality
medicines from Glenmark at all times.

As the world lives through the consequences of the COVID-19 pandemic, Glenmark
continues to strive in every possible way to pre-empt and/or mitigate its impact on
our business, our workforce and the communities among whom we operate.
Company is wholly aware that for the world to stage a recovery from this major
setback, it will require every constituent to play its part.

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