Glenmark sees 22-25% sales growth, no acquisitions in FY13

Nachiket Kelkar
Moneycontrol.com

After beating street expectations in the fourth quarter, Glenmark Pharmaceuticals expects to continue strong growth momentum this year too. It expects sales will rise 22-25% (excluding licensing income), helped by new drug launches in the US market and strong growth in most other regions.

EBITDA (earnings before interest, taxes, depreciation and amortization) is likely to be in Rs 900-925 crore range for the full year, company officials said in a conference call on Wednesday.

But the company's main focus in the current financial year will be on reducing its high debt of Rs 1,924 crore. It incurred Rs 146.6 crore in finance costs, nearly as much as its consolidated profit in fourth quarter.

Glenmark officials said there are no plans to acquire companies this year and free cash flows in FY13 will also go towards debt reduction.

Glenmark's consolidated net profit for the fourth quarter rose better-than-expected 33% year-on-year to Rs 150.4 crore, helped by healthy growth in the domestic and US market. Quarterly sales rose 34% to Rs 1,065.86 crore.

Analysts had expected the company to report a net profit of Rs 127 crore on revenue of 1,000 crore, according to a CNBC-TV18 poll.

Glenn Saldanha, the company's chairman and MD said virtually every geography (except central and eastern Europe) that it operates in is profitable at the EBITDA level.

Among key business segments, revenue from Glenmark's generics business rose 48% in the quarter, while speciality business saw 28% growth in Jan-March.

It has allocated Rs 250 crore on capital expenditure this year and plans to spend 6-7% of sales on research and development.

US GENERICS BUSINESS

Glenmark, through its arm Glenmark Generics, launched 12 products in the US market in 2011-12, most of which were in the dermatology and oral contraceptive segments.

In March, it initiated the launch of Fluticasone Propionate lotion, a copy of Nycomed's Cutivate lotion. Under the terms of the settlement agreement Glenmark will market and distribute its product under a royalty-bearing license from Nycomed.

As of March 31, Glenmark had 78 generic products approved for distribution in US and it has a further 38 applications pending at various stages with the US Food and Drugs Administration (FDA).

INDIA AND REST OF THE WORLD

Glenmark's domestic formulations business grew 19% last fiscal year, while continuing to gain market share in focus segments.

Saldanha said the company has completed restructuring the domestic business. Inventory rationalization was done in the third quarter. It is expecting to outperform the industry in the domestic market this fiscal.

Overall sales in Africa, Asia and CIS region rose 25% in the fourth quarter.

Glenmark said 10 products have been registered in the Asia region during the year and these will drive growth in the fiscal 2013.

The company also expects rest of the world, including Latin America, will continue to show good growth in fiscal 2013.

Glenmark has a total staff strength of around 9,000 employees and plans to increase it by 10% this year.

The street cheered Glenmark's better-than-expected results. The stock was up 2.1% at Rs 337.70 in morning trade on NSE.

nachiket.kelkar@moneycontrol.com