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| Rejigged, ready
Glenmark Pharmaceuticals has reorganised its business into speciality and generics. Under the exercise, which commenced in Q3 FY08, Glenmark has transferred its generics and active pharmaceutical ingredients businesses to its subsidiary Glenmark Generics Ltd. The branded business (R&D, biologics and branded formulations) will remain in Glenmark Pharmaceuticals.
It appears to be a good move and one needs to keep an eye out for key triggers.
The company has a fairly diversified reach in terms of geographies and products in the generics division in both regulated and semi-regulated markets like the US, India, Latin America, etc. In the US, it has presence in the dermatology, controlled release substances and oncology, which have relatively higher entry barriers.
It has over 35 ANDAs awaiting US FDA for approval/ launch. The US marketing rights for Clobetasol Propionate products (related to dermatology) mark the company's entry into the US semisolid product market and it plans to launch 11 more dermatological products in CY08. Should the plan materialise, there may be good upsides, though delays could affect adversely.
The company has recently initiated the marketing and distribution of Nabumetone tablets (used to treat pain or inflammation caused by arthritis) and Hydroxyzine Hydrochloride tablets (for treatment of anxiety) in the US market. The products have market sizes of $97 million and $60 million, respectively.
Scalability may emanate from its expansion in the European markets where it plans to replicate the US strategy.
The company has a strong R&D pipeline in terms of 6 New Chemical Entities and 5 New Biologic Entities, which makes it a highly potent company albeit at a higher risk. So far, Glenmark has received $115 million in the form of milestone payments and royalties on sales for three molecules - Oglemilast, GRC 8200 & GRC 6211 and its track record in monetising molecules stand it in good stead and continual progress may result in potential upside.
At a PE of 21, at Rs480.55, it appears to hold tremendous potential. However, in the backdrop of market volatility, buying in a staggered fashion may be prescribed for only those with a high-risk appetite.
Under license from www.3dsyndication.com
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