For Glenmark, US sales growth pickup holds key to driving earnings prospects


Glenmark Pharmaceuticals Ltd’s stock has corrected more than 30% from its 52-week high in July 2021. With the extraordinary gain momentum, seen during the first half of the year amid sales of covid treatment drugs, declining, investors await fresh triggers on earnings growth.

December quarter earnings showed Glenmark’s domestic sales remain on a firm wicket. Nevertheless, it is the US sales that need to catch pace.

The company’s domestic formulation sales grew by about 14% year on year, while US sales declined 3%. Glenmark did well in rest of the world and European markets with sales growing 21-24%.

Glenmark’s prospects remain strong in the domestic arena moving forward. Non-covid base portfolio grew 15.5% as compared to the 11% market growth of the overall segment during the quarter, the company said referring to IQVIA data. 

The growth was fuelled by new launches. Glenmark launched eight new products in the domestic market during the quarter. Key launches included the first triple combination of Remogliflozin, Vildagliptin and Metformin in the diabetic segment. Meanwhile, there has been a very minimal contribution from favipiravir sales in 3QFY22. 

Analysts at Elara Capita said they expect India revenue CAGR (compound annual growth rate) of 11% over FY21-24. However, they estimate a 3% CAGR in US revenue over this period. Therefore, a pickup in the revenue growth in the US holds the key for the company’s earnings growth. 

With pricing pressure in the base business in the US hurting growth, analysts at Motilal Oswal Financial Services Ltd have cut their earnings estimates by 6% for FY22, FY23, FY24E to factor ongoing price erosion in the US generics, and a higher operating expenses for promotional activities of new launches and major brands.

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