MUMBAI: Shares of Glenmark Pharmaceuticals surged 40% on Monday to touch its 52-week high of ₹572.70 apiece as investors cheered the drug maker’s launch of an oral antiviral drug for treatment of covid-19 patients with mild to moderate symptoms.
Glenmark Pharmaceuticals on Saturday launched antiviral drug favipiravir, under the brand name FabiFlu, for the treatment of covid-19 patients at a price of about ₹103 per tablet. The drug will be available as a 200 mg tablet at a maximum retail price of ₹3,500 for a strip of 34 tablets, Glenmark Pharmaceuticals said. FabiFlu is the first oral favipiravir approved medication in India for the treatment of covid-19, it added.
Analysts said it is very difficult to estimate the financial impact at this stage considering uncertainty over potential covid-19 patients and its longevity. According to analysts at ICICI Securities, the dosage translates into maximum treatment cost of ₹12,566 per patient.
“We maintain our estimates and raise target price to earnings (PE) to 15 times from 12 times to factor in potential upside from Favipiravir and strong research and development (R&D) capability," ICICI Securities said. It added that regulatory hurdles and competitive pressures in the US could be downside risks.
The stock currently trades at valuations of 14.4 times on FY21 and 12.6 times FY22 earnings and enterprise value EV/EBITDA multiple of 7.9 times FY21 times and 7.1 times FY22.
According to ICICI Securities, US revenues of Glenmark would gradually scale up with new launches. “This would aid margin expansion in tandem with cost control measures that have been implemented. Company would also be able to strengthen its balance sheet by reducing debt with cash infusion from the strategic partner in Ichnos Sciences (innovative wing) and sale of non-core assets," said ICICI Securities.
This year, Glenmark shares have risen 53.16% so far, beating benchmark Nifty Pharma which gained 26.53%. In June, Glenmark stocks have surged nearly 50%. Currently, Glenmark has 21 buy ratings, eight hold and two sell ratings by analysts on Bloomberg.
Glenmark had received the Drug Controller General of India's (DCGI) nod to conduct phase-3 clinical trials with oral antiviral favipiravir among covid-19 patients in early May. Favipiravir has been under compassionate use in Japan and 2050 patients have already been administered for clinical use and high recovery rates were observed at 7 and 14 days of treatment. It has also been approved by Italy and China for experimental/compassionate use in covid-19 patients.
Favipiravir can also be used in patients with co-morbid conditions like diabetes and heart disease as it has wide therapeutic safety margin.
Earlier last month, Glenmark had announced that it was conducting another clinical trial to evaluate the efficacy of two antivirals favipiravir and umifenovir as a combination therapy in moderate hospitalised adult covid-19 patients in India.