Home / Markets / Mark To Market /  Gland Pharma: Near-term headaches, long-term gains

Gland Pharma Ltd’s September quarter performance was mixed. Strong growth across geographies was a cheer but disappointment on the margin front was a dampener. Even so, shares of the company ended 1% up on Monday amid broad market weakness.

Analysts attribute the underwhelming gross margins to adverse product mix and an increase in cost pressures for the drugmaker. What’s more is that delay in exports of the Sputnik vaccine is also giving some discomfort to investors. In fact, some analysts have pruned their forward earnings estimates for the firm. Those at Motilal Oswal Financial Services Ltd have lowered their earnings per share estimate by 4% for FY22 and 2% for FY23, mainly to factor in some delay in commercialization of the Sputnik contract.

A healthy uptick
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A healthy uptick

While these are near-term headaches, the longer-term outlook is still upbeat for the firm. Here, the growth metrics give comfort. India sales grew by 19% year-on-year (y-o-y). The availability of new capacities for the domestic market is helping volume growth of the core portfolio. The core markets of US, Europe, Canada and Australia that contributed about 60% to revenue grew 25% y-o-y during the quarter. Being a niche player, Gland Pharma’s injectable portfolio is a key monitorable.

The firm is expected to add four complex injectable filings in FY22 comprising three hormonal products and one peptide. It is also exploring partnerships to accelerate entry into the biologics contract manufacturing (CDMO) market.

Progress on vaccines and other biosimilar opportunities is being watched keenly and remains crucial to enhance addressable opportunity, according to analysts. Expansion in other overseas markets is also crucial as it will help improve manufacturing efficiencies.

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