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Earnings

Glenmark expects margin improvement in FY20, says innovation remains a key driver

Updated : May 30, 2019 01:13 PM IST

Drug firm Glenmark Pharmaceuticals reported a 6.62 percent rise in its consolidated net profit to Rs 161.66 crore for the fourth quarter ended March 31. The company had posted a net profit of Rs 151.62 crore for the corresponding period previous fiscal. Consolidated revenue of the company stood at Rs 2,563.47 crore for the quarter under consideration. It was Rs 2,279.81 crore during the same period a year ago.

Glenmark Pharmaceutical Q4 disappointed as revenue missed the mark and margins were under pressure.

Discussing the quarterly performance and the outlook going forward, Glenn Saldanha, CMD, Glenmark, in an interview with CNBC-TV18 said, "For the quarter we grew at 12.8 percent, for the full year the growth was close to 10 percent and if you take out Zetia from the year, we have grown 12-13 percent on overall level."

“The US generics business continues to remain challenging for most of the industry. For us, in Q4, we witnessed significant price erosion particularly on the dermatology franchise,” he said, adding that from Q1 of FY20 growth should come back on the dermatology products and also rest of the franchise.

With regards to margins, Saldanha said, “We took some one-offs in the P&L, we transferred Glenmark Lifesciences, our API business into a subsidiary and we had certain transfer charges and we had one-off payment for that. We also launched Remogliflozin in India and we had one-off payments on account of clinical trials. So if you add that back the overall margins continue to trend around 16-17 percent. We see that continuing to grow in FY20.”

Talking about the business outlook going forward, Saldanha said, “In Glenmark, we have been big believers in innovation and continue to invest aggressively in innovation. Now we have made a decision to spinout all our innovative assets into our US company and raise capital within the next 12-18 months. We think from there on innovation should fund itself through external capital which will get raised in the US.”

"We continue to believe that there is significant value in the innovation pipeline of the company, which would unlock when the company raises capital next year," he said, adding that innovation continues to be a big driver for Glenmark.
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