Glenmark India business will be back on track in Q4: Glenn Saldanha

Glenmark Pharmaceuticals’ India business will be back on track in the next quarter, said Glenn Saldanha, Chairman and Managing Director, following the impact from a one-time restructuring to set right “inefficiencies” in the distribution channel.

The inefficiencies have existed since inception, and the correction will help working capital, Saldanha said, adding that in Q4 (the last quarter of the financial year), the India business would be “back on track”, trending at about Rs 1,000 crore.

Addressing several analyst queries on the distribution channel restructuring, he said, the company’s model was different from its peers, and they were now streamlining the stockpoints and reducing stock in the channel. The India business would grow at 10-12 per cent, outperforming the market, he added.

The Glenmark stock was up 7.94 per cent at ₹873.85 on the BSE at 10.37 am on Friday.

While announcing its financial performance for the third quarter ended December 31, 2023, on Wednesday, Glenmark said the consolidation of stock points and rationalisation of channel inventories had led to a “temporary dip in sales for the India business during the quarter”. Glenmark’s sales from the formulation business in India in Q3 FY 2023‐24 stood at ₹262 crore, as against ₹1,074 crore in the previous corresponding quarter, a decline of 75.6 per cent.

In the third quarter, Glenmark’s consolidated revenue at ₹2,909 crore was down 16 per cent from ₹3,463 crore in the same period last year. The lower sales was attributed to the one‐time impact on the company’s India business. Excluding this impact, Glenmark’s consolidated revenue in Q3 FY24 would have been approximately ₹3,779 crore, growth of approximately 9 per cent over the previous year, the company had said.

EBITDA was at ₹28 crore in the quarter under review, as against ₹620 crore in the previous corresponding quarter. This was adjusted for foreign exchange loss of ₹16 crore, and hyperinflationary accounting impact of ₹48 crore in Argentina in Q3 FY 2023‐24, the company said.

Divestment of GLS

The company’s reported figures - excluding Glenmark Life Sciences (GLS) - was ₹2,506 crore in the period under review, as against ₹3,100 crore last year, a 19 per cent decline. Glenmark had sold a majority stake in GLS to the Nirma group for ₹5,651 crore last September.

“Glenmark is going through a transitionary phase on account of the divestment of Glenmark Life Sciences. In spite of the one‐time impact on our India business revenue due to the changes in our distribution model, our secondary sales growth remains strong, and we continue to out‐perform the market in our key therapy areas.

“Meanwhile, our Europe and the RoW markets have maintained their robust growth trajectories, and we anticipate a resurgence of our US business from Q4, driven by new injectable product launches” Saldanha said.

Further, he told analysts, the formation of Ichnos Glenmark Innovation (IGI), an alliance with its global biotech subsidiary Ichnos Sciences Inc, will see the companies pooling all oncology (cancer treatment) products under one umbrella. Future innovation efforts will be routed through IGI, he said.

Glenmark’s North America revenue registered sales of finished dosage formulations at ₹762 crore for the quarter under review, as against ₹837 crore for the previous corresponding quarter, an 8.9 per cent decline. It’s Europe’s operations clocked revenues of ₹635 crore, as against ₹493 crore, a growth of 28.9 per cent. And the Rest of the world (RoW) markets clocked revenues of ₹725 crore, as against ₹654 crore, a 10.8 per cent growth. External sales for GLS in the period under review stood at ₹ 412 crore, compared to ₹375 crore last year, a 9.9 per cent growth.

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