HQ Team
February 1, 2023: Glenmark Pharmaceuticals, an Indian global drug maker with a focus on dermatology, respiratory and oncology areas, forecasts lifting of China’s COVID-19 curbs may ease disruptions in the supply chain situation.
The Mumbai-based pharmaceutical company predicted a “roller coaster” worldwide economic scenario with “talks of recession, inflation leading to slow consumption, some layoffs” and an uncertain geopolitical situation.
“Now, closer to home, we have the China situation. And frankly, we think that this is going to ease off, with the Chinese government deciding to allow travel, the Lunar New Year travel is coming up,” said Dr Yasir Rawjee, a chief executive officer, during an earnings call.
“And our information from our partners in China is things are good. Manufacturing is back. And, so essentially, we are going to hopefully see an easier supply chain situation.”
He said the only factor that might hinder this could be the whole situation with the freight and the freight movement.
‘Impact on inventory’
“And as a result of that, there could be some impact on inventory. Because we do believe that stocking up helps. I mean, it’s been something that has helped us in the past, and we would continue to take that approach.”
For the quarter that ended December 31 2022, the company posted a 3.5% rise in its consolidated revenue year-on-year. Its’ revenue grew to INR 5,407 million from INR 5,225 million in the same quarter last year.
“Coming to the cost situation with the gas and oil prices easing off, we’re already seeing a better situation with solvent prices, and that has an impact directly for us as well as on the raw material prices that we use,” said Rawjee.
Glenmark has 23 products in the development pipeline — four iron complexes, of which one has was filed. It added one more molecule to the seven molecules already developed.
Four of them are ready to supply exhibit batch quantities, and production is now on at a new oncology block, built in Dahej that came online this quarter in Q3, said Rawjee.
Molecule monetization
“We expect that the run rate of new molecules will actually improve as we go along because we’ve continued to populate the development portfolio with those opportunities. And as a result, we will see more-and-more molecules monetizing within this decade.”
In Dahej, the company also added 240 kiloliters to its capacity. “And as far as the Ankleshwar capex goes, we are nearly complete.”
“There’s a pretty good recovery on the GPL business as well, the Glenmark pharma business. And the demand on the CDMO side will also pick up. So all levers of business looking up,” he said.
The external business was driven by India, Europe and Latam, while US business saw a healthy recovery during the quarter.
“We continue to remain a net-debt-free company with cash and cash equivalents of about INR 4,200 million on the books as of December 31, 2022,” said Tushar Mistry, the chief financial officer of the company.
In the next three to four years, contract development and manufacturing’s contribution would double from 8% now to 14% going forward because “that’s the way we are pursuing it with respect to the life cycle management opportunities as well as the opportunities,” Ramjee said.
