Glenmark Pharmaceuticals Ltd’s March quarter results benefited from higher growth in specialty pharmaceuticals. Its consolidated sales rose by 44% from the year-ago period, to Rs709 crore, due to a 62% growth in its specialty business, while its generics business revenue grew by 23%. The specialty segment contributes around 60% of revenue with generics bringing up the rest. The company’s profit at Rs103 crore, compared with a loss of Rs121 crore in the year-ago period, came in higher than consensus estimates.

In the specialty business, semi-regulated markets (Asia, Africa and the Commonwealth of Independent States) contribute only one-third of revenue, but have tripled in size since a year ago. Some of this is due to a low base, but sequential growth at 50% is healthy, too.

Market growth, new product launches and distribution expansion were the key reasons for this region’s performance. India is another key growth driver, as the market expanded 17% in fiscal 2010.

Also See Robust Performance (Graphic)

During the March quarter, its reported sales rose by 35% year-on-year (y-o-y) and by 19% on a sequential basis. India’s market is expected to grow at a fast rate in 2011 too, sustaining the growth momentum for firms such as Glenmark. While business in Latin America and Europe, too, picked up, these are much smaller markets, but ones that are expected to scale up in fiscal 2011.

Glenmark’s generics did grow at a relatively lower rate compared with the specialty business, but did much better than the December quarter, when y-o-y sales rose by just 1%. The US market contributed nearly two-thirds of the generics business in the March quarter, with sales rising by 18%. Its API (active pharmaceutical ingredients, or the basic chemicals used to make medicines) business revenue rose by 39%, which was the main reason for higher sales growth.

The US generics business growth is likely to do much better in the current fiscal. During the March quarter, it got four ANDA (abbreviated new drug application) approvals in the US market, and during the year, it got 10 final approvals and six tentative approvals.

During fiscal 2011, overall sales are expected to grow 30-40%, Glenmark’s management said in a conference call. Its generics business is expected to perform better, as new product launches, especially those with exclusivity, lead to higher growth in the US markets.

The specialty business, too, can be expected to do better during the year. Any setbacks on its new drug research or US generics business front may weigh on investor sentiment, as will a prolonged delay in the listing of its generics subsidiary.

Graphic by Yogesh Kumar/Mint

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