Select Your Language

Glenmark Pharmaceuticals


Glenmark Pharmaceuticals 




·         MSD sues Glenmark for patent infringement: The US-based MSD Pharmaceuticals (MSD Pharma) has approached the Delhi High Court claiming a patent infringement by Glenmark Pharmaceuticals (Glenmark) on its oral anti-diabetic drugs sitagliptine, sold under the brand name of Januvia, and sitagliptine + metformin, sold under brand name of Janumet. Glenmark launched these products in India under the brand name of Zita and Zita-Met after getting marketing approvals from the state regulators under the Drugs and Cosmetics Act. Though the court has not imposed any injunction order on Glenmark’s Zita and Zita-Met in its initial round of hearings, which means that the company will continue to sell these products in India, the legal battle is likely to prolong and a later stage injunction order is not ruled out. The move of MSD Pharma was anticipated and we consider this a negative development for Glenmark.

·         A series of small-intensity negatives to impact sentiments; long-term growth story intact: Glenmark has witnessed a series of small-intensity negatives in the recent months which includes (1) product recalls in the US (a very small batch of generic Singulair); (2) legal actions by Intendis GmbH, Interserv GmbH and Bayer Healthcare Pharmaceuticals objecting the Paragraph-IV (para-IV) Certification on azelaic acid (reference brand Finacea); (3) legal challenge by MSD Pharma to block its anti-diabetes drugs in India; and (4) decline in the market share of key products in the US like generic Singulair, Cutivate cream and Bactroban cream (yet commands lion’s share). On the positive side, the company has recently won the patent case against GlaxoSmithKline over anti-malarial drug Malarone and has planned to launch it in the UK (we estimate a revenue potential of Rs40-45 crore). Besides, it has also witnessed a considerable increase in the market share of the recently launched generic Maxalt and Aldara in the US, which partially offset the market loss in other products.

·         We keep our estimate intact; maintain Buy with price target of Rs600: Most of the negatives during the past months will not have any material financial repercussions on Glenmark in the near future, while we are confident of its long-term growth story. We expect the company to register a 17% and 25% revenue and core profit compounded annual growth rate (CAGR) respectively over 2012-15E. Therefore, we maintain our earnings estimate and price target of Rs600, which include Rs501 from its core business (15x average earnings per share [EPS] for FY2014 and FY2015 from base business) and Rs89 from its research and development (R&D) pipeline. We maintain Buy rating on the stock.