Glenmark plans IPO for generics business

Glenmark plans IPO for generics business

Mumbai: Drug maker Glenmark Pharmaceuticals Ltd said on Wednesday that it plans to spin off its generics business into a new subsidiary and list it through an initial public offering (IPO) by the middle of next year.

The company plans to dilute not more than 30% of the new subsidiary, to be called Glenmark Generics Ltd, Glenn Saldanha, chief executive and managing director, Glenmark Pharmaceuticals, told a press conference.

The funds raised from the IPO would be used to acquire a marketing firm in the US, build the parent firm’s speciality drug business and build a late-state research pipeline, Saldanha added. “I do not think it is the question of scale, it is a question of focus," Saldanha said, when asked about the reason for the spin-off.

Responding to questions on whether shareholders would get shares of the new company, he said, “It is too early, we have not yet decided the modus operandi of the issue."

Glenmark’s share price dropped by 0.91% to Rs486.45 on the Bombay Stock Exchange in anticipation of the demerger announcement on Wednesday.

The company had a total sales of Rs1,127 crore in the year to 31 March and it is expected to touch Rs1,909 crore, of which Rs707.4 crore is expected to come from the generics business, by the end of this fiscal.

Revenues from the generics business was $90 million (about Rs414 crore) in the financial year ended March, while for the speciality drug business it was $197 million, Saldanha said. He added that in the current fiscal year, the generics business is expected to double to $180 million and speciality drugs to go up to $306 million.