Glenmark falters on generic Zetia losing steam midway through exclusivity

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26 Aug, 2025 12:21

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Shares of Glenmark on Friday registered its biggest intraday fall in seven years, with the stock plunging as much as 14 percent, a day after the company reported lower than expected Q4 numbers.

Analysts attributed the dip in Q4 numbers to lackluster performance of US generics business that constitutes 40 percent of company’s revenues.

Sequentially US sales dropped 23 percent to Rs.1000 crore as generic Zetia lost its steam in first few months into the launch.

Glenmark reported its best ever results in December quarter with record net profit of Rs.477 crore on revenues of Rs.2535 crore – largely riding on the windfall gain generated by generic anti-cholesterol drug Zetia that enjoys 180-days marketing exclusivity in US.

The company launched the drug in December 2016 in US market, through its partner Par Pharmaceutical, a subsidiary Irish drugmaker Endo, under profit-sharing agreement.

Zetia was said to have contributed around USD 60 million or over a third of company’s US generic sales in the third quarter.

The company refuses to provide break-up of generic Zetia sales.

Analysts were anticipating Glenmark’s Q4 to be even better based on calculations that generic Zetia would gain full momentum in terms of sales in full quarter of exclusivity.

The company too projected generic Zetia to bring in an overall windfall in the range of USD 200 to 250 million during the exclusivity period.

However the management revised guidance on Friday indicating that the sales of generic Zetia may well fall short of USD 200 million mark, driving the shareholders into selling mode.

The management commentary of a better show in the ongoing quarter didn't cut much ice.

The company though didn’t specify reasons for decline of generic Zetia sales, but said it wasn’t able to get traction in market share it anticipated earlier.

Glenmark has a 57-58 percent market share for Zetia sales in US.

“Sharp decline in US revenue sequentially is surprising,” said JP Morgan in its note on earnings.

Glenmark isn’t losing hope on generic Zetia yet as exclusivity extends into Q1 of FY17.

“We still have Zetia being sold in the current quarter, so automatically, the current quarter should look good for the US business,” said Glenn Saldanha, Chairman & MD of Glenmark,” in the earnings call.

Analysts say there is something amiss in Glenmark and its partner’s strategy with generic Zetia.

“Despite a 46 percent slid in Q1 sales Merck, the innovator still continue to retain significant market share on the drug,” said an analyst who didn’t want to be names.

Merck reported sales of USD 334 million on Zetia in March quarter.

Merck holding on to Zetia could be bad news for Glenmark because the company is banking on the drug to boost its cash flow.

“Cash accretion from Zetia opportunity is critical for GNP to de-lever and jumpstart sustainable growth trajectory with prudent organic/inorganic initiatives,” said Edelweiss in its recent report.

Glenmark has a net debt of around Rs.4000 crore.

Analysts also worry about an imminent slowdown of US business post the end of exclusivity of Zetia, if not backed by new approvals.

Like many other Indian generic drugmakers, Glenmark too is facing pricing pressure due consolidation of distribution channels and the rising competition. In the fourth quarter alone, the company saw 15 percent price erosion of its base business. It expects price erosion to be in the range of 10-15 percent in the current financial year.

“There may be a quarter or two where sales could be lower quarter-on-quarter, but we are pretty confident with the new product approvals, it will come back in Q3 and Q4. On a full-year basis, as I said before, we should be ahead of FY17 for the US business in terms of topline sales,” Saldanha said.