Crofelemer approval a boost for Glenmark Pharma

The US FDA approval marks a key milestone and secures a significant potential revenue stream for Glenmark
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First Published: Wed, Jan 02 2013. 02 01 PM IST
Glenmark Pharma has the exclusive rights to sell crofelemer  in India and 140 developing markets, not including China. Photo: Pradeep Gaur/Mint
Glenmark Pharma has the exclusive rights to sell crofelemer in India and 140 developing markets, not including China. Photo: Pradeep Gaur/Mint
Updated: Wed, Jan 02 2013. 10 15 PM IST
The US food and drug administration (FDA) has approved Crofelemer, a new drug, to treat diarrhoea in HIV-afflicted patients undergoing antiretroviral therapy. This is good news for Glenmark Pharmaceuticals Ltd for a few reasons. The company has the exclusive rights to sell this drug in India and 140 developing markets, not including China.
It had estimated at the time of announcing the tie-up that the drug could earn up to $80 million (around Rs.435 crore today) in revenue for this treatment. Glenmark will also supply the basic input for making this formulation to Salix Pharmaceuticals Inc., which holds the rights to sell this drug in developed markets, and had filed for US FDA approval for the drug. Salix was facing some delay in getting approvals, though this drug had been earmarked for fast-track clearance by FDA.
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More uncertainty had developed over Glenmark’s Crofelemer opportunity as Napo Pharmaceuticals Inc. moved to terminate its licensing agreements. But the matter went into arbitration, which went in Glenmark’s favour. The arbitrators also affirmed the company’s right to supply Crofelemer to relief agencies for territories it has rights to.
The development marks the successful culmination of a key new drug opportunity for Glenmark, albeit a co-developed product.
That should be seen as a positive, but the actual benefits will take some time to reflect in its performance. Salix has yet to make a statement on the approval, and that may give some indications on when it expects to launch the product. Glenmark will initially benefit from the revenue earned from supplying the basic inputs to Salix.
It will simultaneously use the US FDA approval to hasten the process of getting approvals to market Crofelemer for HIV-related indications in its territories. Even then, Glenmark is expected to launch its first formulation only in 2014-15. That is a long way away for investors, and till then revenue will be limited to the supplies to Salix. But the US FDA approval marks a key milestone that has been in the making for years now, and secures a significant potential revenue stream.
Glenmark’s shares did not react much to this development, and were down by 0.92% at the close. Though the development is significant, the fact that Glenmark’s stock has already risen 22% in a month, and the full benefits will be visible only in the long run, may explain this reaction.
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First Published: Wed, Jan 02 2013. 02 01 PM IST
More Topics: Glenmark | Crofelemer | Salix | FDA | US |
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