BackGlenmark hit by weak growth in India, mark-to-market forex losses
Glenmark hit by weak growth in India, mark-to-market forex losses
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Glenmark Pharmaceuticals Ltd’s December quarter results suffered from mark-to-market (MTM) forex losses, while inventory correction affected domestic sales growth. Consolidated revenue rose by 37.7% year-on-year (y-o-y) to ₹ 1,031 crore. Its operating profit fell by 23%.
India contributes to about half of Glenmark’s speciality revenue; sales in this market grew by just 11.3% against the 19.7% growth in the September quarter. Though secondary sales— from the retailer to the customer—have grown ahead of the market, primary sales—to the stockist from the company—have grown at a slower rate. The company is lowering its pipeline inventory and receivables’ levels in a bid to improve its working capital management.
Revenue from other geographies is growing well, partly aided by a depreciated rupee. In the speciality segment, sales in Europe grew by 48.4%, in Latin America by 47.5% and in the remaining other markets by 48%. On the generics side, revenue rose by 45.3% y-o-y, with key markets such as the US and Europe leading growth.
The management said in a conference call that it expects the working capital effect on the Indian business to last in the March quarter. That may see this business report another weak quarter. But its overseas operations, barring a few, seem in a good shape. Any volatility on the foreign exchange front will be a negative. In the near to medium term, a resolution of the dispute over anti-diarrhoeal drug Crofelemer will be a positive. As will any upsides from its drug discovery programmes.
Glenmark’s reported net profit figure of ₹ 46 crore, a 47% y-o-y decline, will startle even those investors who had factored in some MTM losses. These losses are notional and should eventually reverse, but the underperforming Indian pharmaceutical business may weigh on the sentiment in the near term.
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Also See
Weak Medicine (PDF)
Quarterly Performance (PDF)
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