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Robust growth in India (29.9 per cent) and other emerging markets (66.7 per cent) such as Russia, CIS, Africa and other Asian countries lifted Glenmark’s performance in the December quarter.
Licencing income of Rs 49 crore from Forest Labs helped the 1.6 per cent year-on-year improvement in operating margins to 23.2 per cent. Excluding licencing income, the margins are lower by 1.3 percentage points compared to the same period last year.
India formulations growth was driven by scale up in the non-prescription drugs and unbranded generic drugs.
But, the management is cautious on sustaining the current growth pace in the light of competition from unlisted players, slow pace of new product approvals and impending pharma pricing policy.
Secondary sales data published by market research firm AIOCD AWACS also point to a slow down in drug demand. Though India accounts for a fourth of Glenmark’s revenues, the contribution at the operating profit level may be significant given the healthy domestic margins.
Hence, a structural sluggishness in the market may moderate the company’s margins in the future.
US share
With a portfolio of 83 products, US accounts for almost a third of Glenmark’s revenues. US revenues grew 36.8 per cent to Rs 436 crore, compared to the same period last year.
The management is confident of sustaining 20-25 per cent growth annually in this market, on the back of a healthy pipeline of 46 products pending approval.
Despite unfavourable data from the phase-II trials for the innovative molecule Revamilast targeting rheumatoid arthritis, the test result for asthma indication may be the key event to watch for in the near term.
> Nalinakanthi.v@thehindu.co.in
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