Things to know before investing in Glenmark Pharma

If you are looking to invest in Glenmark Pharma, then here is all you need to know about the company, its business, and its growth prospects. 

About Glenmark Pharma

Incorporated in 1977, Glenmark Pharma is a research-based, global pharmaceutical company headquartered in Mumbai, India. It is a leader in the discovery of new molecules and is focused on inflammation and metabolic disorders. The company is into formulation across dermatology, internal medicine, respiratory, diabetes, paediatrics, gynaecology, ENT and oncology. They have generic drugs and formulation interests across 85 countries including India, USA, Europe, Latin America, Russia, Asia and Africa.

Why Invest?

1. Over the last 2-3 years, the company has underperformed as compared to the broader health sector due to concerns of high debt, not enough cash flows, and increased spending on innovation and Research & Development (R&D). However, management has indicated that it intends on keeping a tight control on R&D and capital spends so that they can improve their cash flows and reduce their debt.
2. Management aims to reduce approximately 50% of their debt with proceeds from the Glenmark Life Sciences IPO and internal cash. R&D and capex expenditure has also been curtailed. Glenmark also plans to divest its drug development arm, Ichnos. This was expected to happen in the second half of 2021 but has been delayed. In the meantime, Glenmark plans to target licencing deals for a couple of it’s auto-immune assets.
3. Although overall volumes have been lower due to COVID-19 disruptions, Glenmark’s India volumes have done fairly well, specifically in cardiac products, raspatory franchise, diabetes, and anti-infectives. In addition to this, Glenmark is undergoing final trials for a Nitric Oxide Nasal Spray (licenced in India and other Asian markets) for the treatment of COVID-19. It is expected to launch early next year.
4. Abroad, specifically the US, the company’s sales have remained fairly flat over the last 3 years. However, this year the dermatology division in the US is expected to deliver higher revenue due to new launches. Next year, there are a couple of niche, limited-competition products launching which also look promising for growth in revenue.
5. It is worthwhile to note that Glenmark Life Sciences went public in July 2021 at a price of Rs. 750. This is the API arm of Glenmark Pharma. API is an active pharmaceutical ingredient contained in the medicine. Glenmark Life Science’s IPO was very well received and over-subscribed 14 times by retail investors. Today the stock is trading at Rs. 688.

Glenmark Pharma share

Glenmark Pharma’s stock is trading at about Rs. 514. The stock price had been falling from 2015 (Rs. 1200) until when the pandemic hit in March 2020 (Rs. 200). The stock has performed well since then. It is a stock worth adding to your portfolio to have some exposure in the pharma sector. It is a strong company that is tackling their problems and cleaning up the financial concerns that investors have had for a while. Fundamentally, this may be a good price to add to your portfolio.