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Business News/ Market / Mark-to-market/  Glenmark faces up to slower US growth
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Glenmark faces up to slower US growth

The company's sales in the US market rose by a mere 9.3% on slow pace of product approvals

Glenmark’s sales in the US pharmaceutical market continued to show weak growth in the June quarter. The slow pace of product approvals have seen contribution from new products taper. Premium
Glenmark’s sales in the US pharmaceutical market continued to show weak growth in the June quarter. The slow pace of product approvals have seen contribution from new products taper.

Glenmark Pharmaceuticals Ltd’s sales in the US pharmaceutical market continued to show weak growth. It has done a good job of driving sales growth in other markets, keeping sales growth healthy and, surprisingly, maintaining profit margins.

The company’s sales in the US market rose by a mere 9.3% (2% in dollar terms), as the slow pace of product approvals have seen contribution from new products taper. It got one approval in the June quarter. It has 72 generic drug applications pending in various stages of the approval process with the US Food and Drug Administration. Unless the pace of approvals picks up, US market sales growth is likely to be underwhelming.

India’s market growth has recovered from its problems in 2013-14 caused by the new drug pricing policy. The market growth during the June quarter was a relatively healthy 12%, and Glenmark’s own sales grew by 18%, according to a company statement. These figures are for secondary sales, and Glenmark’s reported sales growth was 20.8%. Other main markets such as Latin America and Europe saw high growth rates too.

As a result, overall sales rose by 17.7% while receipt of a research-related milestone payment netted it 30 crore, taking revenue growth to 20.1%. Operating profit margin rose by three percentage points. While the one-time income helped profitability, even after excluding it, its margin rose by 1.4% and was also slightly higher than the preceding quarter’s.

Glenmark’s investors will be hoping it can keep margins steady and non-US markets continue to support growth in this fashion. Excluding the licensing income, operating profit rose by 26% over the year-ago period. Net profit after minority interests rose by 43.7%. That is a decent performance, but Glenmark remains at risk from any of its markets seeing slower sales growth.

In India, for example, the recent price controls on diabetes and cardiology drugs is expected to cut Glenmark’s sales by 10 crore. That is not significant, but an extension of price controls to more categories is a risk factor. Therefore, it needs the US market to recover. For that to happen, a steady stream of approvals will be needed. Its share level is almost unchanged from 8 May, when its previous results were announced, as investors have been disappointed by the US market slowdown.

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Published: 24 Jul 2014, 07:48 PM IST
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