The Hindu Business Line : Glenmark Pharma: A healthy guidance

THE Glenmark Pharma stock closed at Rs 261.75, down 3.94 per cent, even as the company unfolded its plan at the analysts' meet today and gave a clear guidance for 2005-06.

According to Ms Shahina Mukadam, pharma analyst at HDFC Securities, the company put up a sales and turnover guidance, which indicated a jump of around 100 per cent in the current fiscal over the previous one. "This is mainly linked to research outsourcing and milestone payments for that. Roughly 50 per cent of the company's income is from exports or through research deals," she added.

Mr Vikram Janakiraman, General Manager (Strategy) of Glenmark, told Business Line today that during 2004-05, it had signed two research deals for a new asthma and chronic obstructive pulmonary disorder (COPD) drug (molecule). For the North American market, it has signed a deal with Forest Laboratories through its wholly owned subsidiary, Glenmark Pharmaceuticals SA (Switzerland), for a total milestone payment of $190 million. "Out of which, $20 million upfront payment has already been received," he added. For the research on products for the Japanese market, it has milestone payment agreement for $53 million, the first instalment of which would come in the first quarter of 2005-06.

For the European market, the company is in negotiations with several entities for anti-asthma and COPD molecules, the official confirmed. According to industry sources, the company is likely to strike a deal shortly for the European market for a total sum of about $80 million.

As regards the research in anti-diabetic (type II) molecule, for which the company is to enter the pre-clinical trial stage in July next, the market may be even bigger, analysts feel. "The company may start off with a modest deal in the current fiscal in this field too," an industry insider observed.

Ms Mukadam felt that the company's stock, in the context of the unfolding milestone payments and research, is somewhat undervalued. "The risk associated with such research deals gets discounted as the work proceeds successfully from one stage to another," she added.

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