Generic Pharma Companies Stand To Gain If Obamacare Repealed: Glenmark

Generic Pharma Companies Stand To Gain If Obamacare Repealed: Glenmark

Glenmark Pharmaceuticals Ltd. says generic pharmaceutical companies would get a greater share of the American drug market, if the incoming Republican administration led by U.S. President-Elect Donald Trump were to repeal the Affordable Care Act – popularly known as Obamacare.

Glemark unveiled a ten-year strategy plan on Monday, and said oncology, respiratory and dermatology will be key growth areas, going forward. The Mumbai-based pharma company plans to target at least 30 percent of its revenue from the speciality and innovation segment over the next decade. Spends on research and development (R&D) will cross into double digits, and the company will continue to invest in expanding manufacturing capabilities and make investments in its drug pipeline.

“We anticipate R&D spends of about 11 percent of sales. This is net of out-licensing income. We continue to have active discussions for out-licensing opportunities,” said Glenn Saldanha, Chairman and Managing Director of Glenmark in an interview to BloombergQuint.

Over the next 10 years, Glenmark also plans to file 20-25 Abbreviated New Drug Applications (ANDAs) and launch at least 20 generic products in the U.S. on a yearly basis.

The management of Glenmark Pharmaceuticals addressing the media on Monday December 19, 2016 in Mumbai, India

Growth In U.S. But Pricing A Challenge

“We think we will grow revenue by 15-20 percent compounded annual growth rate over the next five years. The bulk of the growth, we still think, will come from the U.S. market.”

Glenn Saldanha, Chairman and MD, Glenmark Pharmaceuticals

Highlighting pricing pressures in the U.S. market, Glenmark’s chairman adds that price erosion is the new normal.

Glenmark has set a revenue target of $200-250 million from the U.S. sales of its generic version of the anti-cholestol drug Zetia, which was launched last week. The management adds that initial traction has been in line with the target.

Even as it pushes to recover money stuck due to Venezuela’s financial crisis, Glenmark says it continues to grow in other Latin American markets like Mexico, Brazil and Argentina. Meanwhile, the company’s Indian domestic business has consistently grown faster than the broader market. The Indian government’s move to demonetise high value currency notes in early November has not affected business yet.

“We have not seen any impact in the month of November. However, it is hard to predict how things will play out from hereon in terms of growth or slowdown.”

Glenn Saldanha, Chairman and MD, Glenmark Pharmaceuticals

Debt Reduction Plans

Some of the cash that Glenmark gets from the generic Zetia sales in the U.S. will be deployed toward debt reduction. The company’s net debt stood at Rs 3,700 crore as of September 30, 2016. “I think debt will keep coming down from here on. We have already guided that it will be lower than it was in March 2016. There is a conscious plan to keep on reducing debt from hereon every year,” said Saldanha in the interview.

Shares of Glenmark Pharma ended at Rs 943.65 per share, up by 1.47 percent. The stock gained for the second straight day, outperforming the Nifty Pharmaceutical index that has been on a four day losing streak.

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