New launches to drive earnings growth in FY18 & FY19: Glenmark
The company has a strong pipeline of products which the company, CMD Glenn Saldanha said adding that new launches will drive earnings for the company in FY18 and FY19. The company has no plans to raise further capital, he said.
Glenmark Pharmaceuticals is betting on new drug launches to drive earnings growth for the drug major. The company expects Zetia generic, which it launched in the US earlier in the month, to contribute revenue worth USD 200-250 million in the next 6 months, Chairman and Managing Director Glenn Saldanha said.
The proceeds from Zetia sales will be used to pare debt, Saldanha said, adding that debt levels by the end of FY17 will be much below the March 2016 levels of Rs 3,100 crore.
The company has a strong pipeline of products which the company, Saldanha said, adding that new launches will drive earnings for the company in FY18 and FY19. The company has no plans to raise further capital, he said.
Glenmark had on Tuesday announced a USD 300 million capital expenditure plan spanning three years.
Below is the transcript of Glen Saldanha’s interview to Ekta Batra on CNBC-TV18.
Q: It has been an iconic month for you. You have launched Zetia Generic in the US, plus you gave out your entire pipeline in terms of research and development (R&D) in December as well, which just took place yesterday. But, I wanted to start with Zetia Generic. It is a big launch for you. How much are you expecting in the next six months up till June?
A: Zetia, we have launched on December 12 through our partner, Par Pharmaceuticals and Endo International. It is a mega-launch for us and initially we had put out a guidance of about USD 200-250 million. We are still sticking with that. So, that is the kind of number you should anticipate over the next six months.
Q: Now, one of the things, which the street is anticipating post the proceeds of Zetia Generic is that maybe that will possibly go into debt repayment. What are your plans when it comes to debt repayment because that might be a little bit of an overhang though your R&D pipeline is looking good, all guns blazing?
A: Clearly, we recognise that we need to bring down debt and that entire proceed is going to go towards debt repayment. So, you will see the debt levels by the end of this year, way below what we had in March, 2016 and next year again there will be further reduction in the debt levels. So, the entire capital is going towards debt repayment.
Q: So, currently net-debt is around Rs 3,700 crore. Where can we see it possibly end of next fiscal?
A: In March, 2016 it was Rs 3,100 crore and we are guiding to numbers below the Rs 3,100 crore by the end of this year. Then, next fiscal you will see a further reduction in the debt beyond that.
Q: Would there be any more fund raising type of activities? We had Temasek which invested in the company as well, anything more on the cards?
A: We have no plans to raise any further capital any time in the near future.
Q: With Zetia Generic obviously, one also talks about what happens post Zetia generics, post the six months exclusivity. What can we see in terms of FY18 launches when it comes to US approvals for Glenmark?
A: We have a very strong pipeline of products, especially in the derm area. Some of the large products like generic Welchol, generic Sevelamer, so there are a number products, which could launch in FY18 beyond Zetia, which will drive growth for the company in FY18 and FY19.
Q: So, if you are talking about a US quarterly run rate, you have increased from USD 80 million per quarter all the way to USD 150 million. You were up around 11 percent sequentially last quarter as well. How much are you going to generate from the US per quarter in terms of an average run rate?
A: Our perspective is at least for the next six quarters from here, you will see consistent growth, quarter-on-quarter (Q-o-Q) growth coming out of the core business. So, we feel pretty good about the approvals, the kind of approvals we keep getting and we have a very strong pipeline, which will drive Q-o-Q growth in the US market.
Q: Seretide generic, that would be another launch that the street is looking forward to. You have guided for FY18, but there could be one geography which you could launch in Q4 of this fiscal itself. Which would that geography be? When can we see a launch in FY18?
A: We cannot give any visibility to which geography, but clearly, FY18 is when the real impact will start playing out where we will have 3-4 different geographies getting approvals and rolling the product out in different geographies.
Q: So, USD 700 million is the market size?
A: Correct. It is about a USD 700-800 million market in the markets where we operate and our goal is to try and be the first generics. So, automatically we can get some substantial market share in the different markets where we operate.
Q: What kind of approvals would you need for Seretide and where does that process stand?
A: We have got all the filings in place already and we have already started going through the approval process and it is only a matter of getting approvals from various markets basically.
Q: One of the reasons why you have seen such a strong spate of approvals, it is one of your best years in terms of US approvals for Glenmark is because you do not have any US Food and Drug Administration (FDA) issues. Glenmark is not known to have a 483. How do you manage to maintain such a high level of compliance or maybe a high level of secrecy?
A: As a company, we are very compliance focused and we continue to drive compliance throughout the organisation. And so far, it has been good for us.
Q: What about your Goa facility? It is expected to be inspected soon. You are expecting something to happen in 2017?
A: We are absolutely expecting the agency any time to come in and audit our Goa facility.
Q: Do you think that maybe this US FDA issue which a lot of these companies have been dealing with, multiple pharmaceutical companies, do you think it is overblown? People need to understand that 483s might just be routine in nature and it happens to each and every company and it should not possibly be blown out of proportion, from an industry perspective?
A: Getting 483s on a facility is a normal thing because when you have inspections, you are going to find gaps, you are going to find deficiencies. So, virtually all facilities will get some kind of 483. The question is how serious are they and how do you deal with that. That is the biggest challenge and some of them can be serious and some of them, the agency may be happy with your response and allow you to continue.