business | IST

Glenmark Life Sciences plans to utilise IPO proceeds to pay off internal debt

The IPO of Glenmark Life Sciences, the API arm of Glenmark Pharma opens for subscription today, July 27. The total size of the issue is around Rs 1,513 crore, which comprises of a fresh issue of Rs 1,060 crore and an offer for sale from Glenmark of up to Rs 453 crore. Yasir Rawjee, MD and CEO, Glenmark Life Sciences, discussed this further with CNBC-TV18.

The IPO of Glenmark Life Sciences, the API arm of Glenmark Pharma opens for subscription today, July 27. The total size of the issue is around Rs 1,513 crore, which comprises of a fresh issue of Rs 1,060 crore and an offer for sale from Glenmark of up to Rs 453 crore. Yasir Rawjee, MD and CEO, Glenmark Life Sciences, discussed this further with CNBC-TV18.
“In 2019, when the API business was transferred into Glenmark Life Sciences, it was done at a value of Rs 1,162 crore. And this was the debt that we were carrying, that we owed to the parent for transferring the business. Now, we have since paid back Rs 362 crore already, plus servicing. So, from our cash generation of the last two and a half years, we have paid back almost Rs 460 crore back to the parent, which leaves us with this Rs 800 crore. And our plan is to pay back this Rs 800 crore from the funds raised from this issue because that will make us completely debt free,” he said.
Considering it's an API business, the demand is there, as long as pharmaceutical sector keeps growing.
“There are two factors, COVID and China plus one, that have added a lot of tailwinds to our business. Now, with respect to COVID, there is a need for countries to manage their budgets, and the budgets have obviously shrunk because all economies are under stress. So as a result of that, the requirement for affordable drugs of high quality are in high demand. And API usually is the highest cost contributor to a drug. And so as a result, in our company, we have seen a huge demand in the last five quarters ever since the COVID wave started off,” he said.
“With respect to China plus one, I can say that our customers are not openly talking about it. But yes, there has been a disproportionate demand for all our API's, except for one travel related to drug where people were not traveling so we had a dip in demand,” he added.
The company is currently operating at about 85 to 90 percent of the facilities, to service the business.
“We are not going to get into the formulations business, because we want to stay with our core and leverage the chemistry platform that we built. There is so much more to do with respect to the API space alone,” he stated.
When asked about the growth triggers for the company for the next three-four years, he replied, “The company has got a very strong portfolio of 120 molecules. This will be one huge lever for us. The overlap with the CDMO side of the business, especially on end-of-life cycle is also very strong. So, this is going to be another lever that is going to help us to drive the business. Then there are markets, such as Brazil, Mexico, Korea, Russia, that are becoming more and more regulated over the years and the kind of service that you need to provide around the API. So, you are not just selling the API, we are selling the entire data package that convinces the Health Authority. So, these are huge growth markets for us apart from the regulated market space in which we already open.”
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