The secret behind Glenmark’s success
Glenmark Pharma’s CEO and MD – Glenn Saldanha talks on how his decision to stay focused on the high-risk area of drug discovery is now paying off.
If you want to enjoy Mumbai rains (that may sound like a cruel joke to most Mumbaikars), this is perhaps the right time to book a table for lunch at the Ming Yang restaurant at Bandra’s Taj Lands End.
As the heavy rains form beads on the huge glass windows, the hazy sight of huge sea waves lashing the rocks is a breathtaking sight. I am late for the appointment by a few minutes, but Glenn Saldanha doesn’t seem to mind the delay as he is busy looking at the picture postcard setting rather intently, writes Shyamal Majumdar.
The few minutes of solitude (the restaurant is almost empty on a lazy Saturday afternoon) must have been a rare opportunity for the 37-year-old CEO and MD of Glenmark Pharma, one of the fastest growing pharmaceutical companies in India.
Saldanha says he is “on the road” travelling to almost all parts of the globe for at least 15 days every month. Even when in Mumbai, his working hours extend well beyond 11 pm as the time difference with other countries means he is attending phone calls from his overseas executives (the company has over 1,000 employees abroad) till late in the night. “Work has become almost a 24×7 affair since I took charge of the company. I suppose it’s just passion for the work which is keeping me going,” says Saldanha, as we order lime juice.
The passion has clearly paid rich dividends. His father set up Glenmark – named after his two sons, Glenn and Mark, in 1977 with Rs 100,000 and three employees. In 1998, when Saldanha took charge (Mark had ventured out on his own), the company had a turnover of Rs 70 crore (Rs 700 million) with a strong presence in the domestic formulations market but almost negligible operations overseas.
Eight years later, the turnover has grown 10-fold at Rs 750 crore (Rs 7.5 billion) and the company operates in 80 countries, which contribute to 44 per cent of the company’s revenue. Saldanha expects to end this financial year with a turnover in excess of Rs 1,000 crore (Rs 10 billion).
But it certainly wasn’t roses all the way. He still remembers the cynicism with which his decision to get into drug discovery research was greeted by his peers in the pharma industry.
The sleepless nights only increased after investors (the company had gone in for an IPO in 1999) started questioning his decision to get into a high-risk area like research and waste their money.
Five years had passed since the IPO and investors were getting impatient in the absence of a success story in research. But Saldanha stuck to his guns and continued to spend over 8 per cent of the company’s revenue in R&D.
“Financial markets in India are still too immature and investors are obsessed with short-termisms. But my experience in the Big Pharma in the US (he is an MBA from New York University and had spent several years in working for companies like Eli Lilly) had opened my eyes. I was clear about one thing: Glenmark has to get into drug discovery if it has to survive in the long term,” Saldanha says, ordering a pan-fried chow mein, prawn fried rice and a spicy chicken dish for both of us.
New Chemical Entity research has the potential to yield very high rewards. A successful NCE can be marketed with a 12 to 14 year exclusivity period during which it can recover its investment many times over. The food arrives fast and Saldanha seems to be liking the pan-fried chow mein the most.
There were two reasons for the 1999 IPO, which got oversubscribed 64 times. First, the company needed lots of cash for the high-risk drug discovery efforts, and second, it needed to attract talent from all over the world.
“I didn’t have enough money to offer and hence had to be liberal with stock options,” he says. People who joined have no reason to complain as Glenmark’s market cap has moved up from $40 million in 1999 to over $1 billion now. Not surprisingly, Saldanha has been able to rope in a lot of IIM graduates.
The trigger for the big leap came in 2004 when Glenmark out-licensed the asthma lead molecule GRC-3886 to the US-based Forest Labs for $190 million and received a milestone payment of $10 million after the molecule completed phase-I clinical trials. The molecule has now completed Phase II.
Saldanha hasn’t had to look back since then. There are six molecules in the pipeline (two in the phase II stage and four in the phase I stage), the company expects to close financial year 2007 with at least 16 to 18 generics in the US market from about four now and the company’s over-200 products in the domestic market are doing remarkably well, with products such as Candid, a skin cream, a household name.
Saldanha seems to have no intention of finishing the food as he doesn’t want “to sleep through his next meeting”, and orders Chinese tea. He speaks passionately about his worldwide team who is fired up by the “start-up like atmosphere” that Glenmark provides. “We want to be innovative in everything we do. That has a great rub-off effect,” he says.
It indeed has, and life has been a real fast-forward so far. In 2000, Glenmark set up its state-of-the-art research centre at Mahape in Navi Mumbai followed by the acquisition of an API manufacturing facility in Ankleshwar from Glaxo SmithKline. In 2003, Glenmark set up its US subsidiary to spearhead its entry into the world’s largest pharmaceutical market.
A year later, the company set up its subsidiary in Sao Paolo, the commercial capital of Brazil, and quickly acquired a company there for strengthening its presence in the Latin American market. Subsequent to that, the company has added several other countries such as Argentina and Switzerland on its map.
As we step out of the hotel, the rains start again. Looking wistfully at the ripples, Saldanha says the one thing he misses the most is spending time with his family.
“But I am still young and I suppose there will be enough time in future to make up for the lapse,” he says before getting into his car. Possibly, and he’ll also get five minutes of romancing the rains before he steps into his next meeting.