Shares of Glenmark Pharmaceuticals Ltd are down nearly 29% since their July highs. Enthusiasm about the extraordinary gains from sales of COVID drugs during Q1 has waned, but the wait for US sales pickup continues.
The second quarter’s performance didn’t provide enough reason to cheer. Decline in domestic formulations and US generics sales offset strong growth in the rest of the world’s markets. India sales declined 7.8%, while US sales grew just 0.3% year-on-year. Top-line growth was restricted to just 6.6%, despite a strong 71.5% growth recorded by rest of world markets.
Rising input prices are also putting some pressure on margins, which have come down to 19.3% a year ago and now to 18.8% in the previous quarter. Hence, analysts await a return in sales growth in India and the US.
see full image
India sales could benefit from around 10 product launches in Q2. Commercialization of FabiSpray in CY21 could also benefit India sales.
Analysts at Elara Capital expect 13% compound annual growth rate in India’s revenue for FY 2011-23. The US sales pickup is also important. At least 47 products are pending approval with the US Food and Drug Administration and the launches are crucial to counteracting pricing pressure.
Analysts at HSBC Securities and Capital Markets (India) Pvt Ltd said, “Increased sales growth in India and the US and control over operating costs (including R&D) are key to an operational turnaround.”
The company said that it has reduced its debt to a minimum. 1,600 crores through a combination of Glenmark Life Sciences Limited’s free cash generation and Initial Public Offering proceeds during the year. Glenmark aims to reduce net debt 1,900 crore by the end of FY22
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,