New Delhi: The most productive research-based pharmaceutical company in the country, according to a Mumbai-based analyst who did not wish to be identified, is Glenmark Pharmaceuticals. Emboldened by its success, Glenmark has forayed into biological drugs by setting up a research centre in Switzerland. The centre hopes to have a drug ready for human trials by 2009. Glenmark, meanwhile, is eyeing more acquisitions in Europe.
The initial claim is borne out by numbers. Glenmark has, in the past six years, churned out six molecules that are in various stages of their lifecycle, spending $20 million on the research and, thus far, earned $57 million (around Rs250 crore) from revenue it has received on just two out-licensed molecules. “Modulated aggression has paid off so far for Glenmark,” said the analyst, who estimates that its total revenue from all six molecules, if they meet all their milestones, could be as much as $500 million.
A company that out-licenses molecules stands to make money only if the molecule meets certain milestones, which are deadlines or targets. “We monetized research early in the game, clinched partnerships and intend keeping it that way. All our six molecules will be in human trials by the end of 2007,” said Glenn Saldanha, managing director, Glenmark Pharmaceuticals. All molecules have to go through several stages of testing before they hit the market as drugs; human testing is amongst the last of these.
Glenmark out-licenses its new drugs in the hard-to-crack markets of North America, Europe and Japan while retaining marketing rights for the rest of the world.
“We are very close to an acquisition in Eastern Europe but it will be a small one… as will be several others that we might do thereafter, in the same geography. We just want front-ends all over from where we can push our own drug pipeline,” said Saldanha, who wants Glenmark to be a proprietary drug maker, not another company trying to make money off generics (off-patent drugs).
The company has so far forged out-licensing deals with US-based Forest Laboratories Inc. and Teijin Pharma Ltd for an asthma molecule, and with Darmstadt, Germany-based Merck KGaA for a diabetes drug. The deals are geography-specific—a smart way of slicing up one molecule among several buyers, said the analyst—with Forest and Teijin developing and launching the first product in North America and Japan, respectively, and Merck doing the same with the second in North America, Japan and Europe.
According to a report on the company by Kotak Securities’ analyst, Awadhesh Garg, Glenmark is expecting its next milestone payment from Forest Laboratories, $35 million, to come in 2007-08. The revised guidance for total milestone payments (including those from other companies) for that year is $69 million. This, along with internal accruals of $65-70 million by the end of 2006-07, will fund Glenmark’s acquisitions, according to an expert on the pharma industry who did not wish to be identified. According to the Kotak report, in a recent meeting with analysts, Glenmark revealed that it is close to a $20-25 million acquisition in Europe, of a company with sales of $10.67-$16 million.
Glenmark is negotiating with a large life sciences company for a pain-relief drug that is undergoing Phase 1 human trials in Europe. It will seek partnerships and out-licensing arrangements for its three other molecules soon.
In the first nine months of 2006-07, ended 31 December 2006, Glenmark recorded sales of Rs893 crore and a net profit of Rs247 crore. The corresponding numbers for the 12-months ended 31 March 2006 were Rs758 crore and Rs88 crore. The Glenmark scrip closed at Rs577.6 on the Bombay Stock Exchange on Friday (its 52-week high was Rs664 and low, Rs228).