OPM close to 30%; US biz key driver: Glenmark Pharma

Q: Walk us through this particular quarter and confirm for us whether an adjustment had been made in this quarter for that milestone payment?

 A: Actually, the milestone is in the previous quarter, not in this quarter. Our consolidated net profit for this quarter, from the base business itself, was Rs 63.25 crore on total sales of Rs 348 crore.

Q: Where have your operating profit margins come in?

A: We have about Rs 101 crore EBITDA margin, which is almost 30% and a large part is driven by a success in the US generic space.

 Q: Could you break up the performance that you have seen in the domestic markets, in terms of sales and the kind of exports you have clocked for this quarter?

 A: Less than 45% of our business comes from India, rest comes from our international businesses.

 That would include exports from India and our local subsidiaries in the US and Latin America. The India business overall, in the quarter grew at 1%.

 The highest growth in our segments is in the US, 140% growth. Latin America grew at 73% that's Rs 67 crore in the quarter.

 Q: Could you sum up the consolidated numbers for us once again if possible?

 A: For the year, our consolidated numbers were Rs 1,241 crore and for the quarter, it's Rs 348 crore and a consolidated net profit for the year is Rs 311 crore and for the quarter Rs 63.25 crore.

 Q: The numbers are much better than what we had expected at the back of Merck deal. What are the other factors which contributed to the higher net profits?

 A: I think the key driver for us is our US business, where we had Rs 80 crore of sales again this quarter; similar to what we had in Q3. We are clocking around USD 19-20 million a quarter in the US, which puts us at about USD 80 million of sales. We had yearly sales of about USD 50 million in the US, compared to just USD 13 million in our first year of operation in the US.

So the US is the main driver followed by Latin America, and the semi-regulated markets have shown phenomenal growth for us. Barring India which had 1% growth in the quarter, purely because of pipeline stocks, all our other business segments have done exceptionally well in the quarter and over the year.

 Q: In fact, Indian market has also grown to about 15%; why is Glenmark left behind?

 A: In India, IMS shows us at a 22% growth, so the demand is very strong and we are outperforming. Because of the pipeline stocks, we had a 1% growth in this quarter. However, we believe that will get adjusted in the next quarter and subsequent quarters.

 Q: You have also filed a Para IV for Zetia, a Schering Corporation's drug. Will there be higher litigation cost, going forward?

 A: We believe, the entire litigation will cost us anywhere from USD 5-7 million over the course of two-three years, whereas, the potential upside is huge on a USD 1.5 billion drug, where we have got the first to file and the 180-day exclusivity, so that's the trade off.

Q: The market has been expecting a couple of deals on your potential research pipeline, can you take us through some that could be clicked in the next couple of weeks or months?

 A: We have two potential deals or more than that. The two that are open right now, have traded six for Europe for licensing and we have one antagonist which is GRC 6211, where we have advance discussions on both of those. In addition, our CB1 antagonist, 10801, goes into clinical trials next month, end of May. That is when we anticipate to start clinicals again in Europe on our CB1 antagonist, which we are extremely excited about.

We have two other molecules in Q2, going into clinical trails in Europe, that's GRC 4039, which is our PDE-4, and we have one more CB2 antagonist for pain which is GRC 10693, which goes into clinical.

So by the end of Q2 we will have about six molecules in clinical development, with many of them already having being partnered out.

 Q: Any status check that you would like to share with Forest Labs moves on additional studies on GRC 3886?

 A: We are going back to the FDA anytime now, and once we get the go ahead from the FDA to start our phase II, we believe we should receive the milestones.

Q: What is the expected guidance from Glenmark for the next financial year?

 A: We have an analyst meet this evening and I don't think it's appropriate for me to put out the guidance before that but it will be a pretty positive number.