Glenmark to end FY21 with better margins led by low expenses, India sales growth and US business rebound

Glenmark on Monday said that they will be able to end FY21 with 19-20 percent EBITDA margins, led by reduction in operational costs, US business turning the corner and India sales growth sustaining.

Glenmark reported Rs 234 crore net profit in Q2FY21, a year-on-year (YoY) drop of 8.4 percent compared to same period of previous year, while revenues rose 4.88 percent YoY to Rs 2952.5 crore as against Rs 2,815 crore last year.

The company said it is seeing 2-3 percent reduction in selling, general and administrative (SG&A) expenses, and 1-2 percent drop in R&D spend.

All this savings are adding upto a 3-4 percent boost in margins, the company said.

Glenmark EBITDA margins were at 16 percent in FY20.

US business revival

The company said the worst is behind in terms of US business, and expects an uptick in sales from Q3FY21 onwards. Glenmark's US business has been pulling down the company's profits in last 3-4 years. Company's North America or largely US sales dropped 11.3 percent YoY in Q2FY21 to Rs 752.2 crore.

"The second quarter is tough one, we have seen the price erosion hitting the bottom. We have been unfortunate to not have too many big approvals coming through. The dermatology area has taken a significant hit as a result of pandemic. However if you look at the upcoming quarters, we are pretty optimistic about Q3FY21, we have quite a few approvals coming Sirolimus, Dimethyl Fumarate, and then of course we have quite a few fighting approvals in next couple of quarters, we do see a positive trend," said Robert Crockart, Chief Commercial Officer of Glenmark at company's earnings call.

was aided by revenue generated from the sales of Fabiflu®(Favipiravir). As per IQVIA, as on year ended Sept 2020,

Glenmark is ranked 14, with market share of 2.31 percent in India.

The company said that while the Fabiflu sales could partially taper-off in the second half of FY21, the base business will continue to grow at 7-8 percent led by Glenmark's chronic and derma portfolio.

Fund raise plan

Glenmark said it plans to complete the proposed capital raise of its R&D subsidiary Ichnos Sciences by December.

"We are getting quite a lot of interest right now from several US investors, the management believes that by December we will be able to close the transaction," said Glenn Saldanha, Chairman and Managing Director of Glenmark said.

On the status of much awaited specialty respiratory drug Ryaltris launch in US, the company said will be soon responding to the USFDA's CRL (complete response letter). The company expects the launch of the drug in FY22.

The company said the R&D expenditure would be in the range of 11-

Glenmark said it has paid Rs 180 crore in gross debt in the first half of FY21. The company's gross debt stood at Rs 4689 crore as on September 30. The company said it expects similar amount of debt reducing in second half of the fiscal FY21.