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Glenmark Pharma looking to unlock value of API arm via IPO route in 2021

The Glenmark IPO plan is being seen as a value unlocking exercise by the promoters. Investors will have the option or flexibility of betting on a pure play API business

March 09, 2021 / 02:35 PM IST
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Mumbai-based drugmaker Glenmark Pharmaceuticals has initiated preliminary discussions with advisors to explore an initial public offering (IPO) of its API (active pharmaceutical ingredients) arm  in 2021 on the back of improved business outlook in the niche segment, sources with knowledge of the matter told Moneycontrol.

“The API vertical of Glenmark Pharma i.e Glenmark Lifesciences, is large enough now to get listed separately. Plus, this segment is expected to fetch rich valuations,” said one of the individuals cited above.

“This is a value unlocking exercise. Post listing, investors will have the option of a pure play API business,” he elaborated. Kiran Mazumdar Shaw-led Biocon is also exploring an IPO for its niche pure play biosimilars company Biocon Biologics.

“As of now the plan is to raise between Rs 1,200 and Rs 1,500 crores via the IPO but the size hasn’t been finalised yet and may vary at a later stage. The DRHP will be filed on a fast-track basis and IPO proceeds can be used to reduce debt,” added a second individual familiar with the listing plans.

“Investment banks - BofA Securities, Kotak Mahindra Capital, Goldman Sachs & DAM Capital - have been taken on board as advisors for the proposed listing,” a third individual told Moneycontrol.


“The Glenmark API business is a stable, cash flow oriented business, “ said a fourth individual confirming the listing plans of the firm.

All the three individuals spoke to Moneycontrol on the condition of anonymity.

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Moneycontrol is awaiting an email response from Glenmark Pharma & Kotak Mahindra Capital and has sent reminders. This article will be updated as soon as we hear from both the firms. Goldman Sachs, DAM Capital & BoFa Securities declined to comment.

“Structurally, India is in a sweet spot as far as the API segment is concerned due to the China +1 strategy and the recent PLI ( production linked incentives) announcements from the government," says Param Desai, Vice President, Elara Capital. The China +1 strategy refers to the business strategy to avoid investing only in China and diversifying businesses into other countries.

“Net debt remains elevated at ₹3,600 crore, although Glenmark managed to reduce it by ₹180 crore during the quarter,” said Emkay Global in its report on Glenmark Pharma released in August 2020.

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According to brokerage report by Motilal Oswal dated 15th February, 2021, “ Glenmark Pharma delivered in-line sales for 3QFY21. However, earnings were better than expected, led by the Domestic Formulation (DF)/API segment and controlled opex. Glenmark is confident of sustaining the profitability over the next 12–24M, led by a better outlook in DF/US/API and an ongoing cost rationalization exercise.”


Two years back, Glenmark Pharmaceuticals had attempted to sell a minority stake in its API business to private equity funds but those plans did not fructify. According to its website, Glenmark Lifesciences supplies over 130 APIs to more than 700 customers across 65 countries in North America, Europe, Japan, Latin America, MENA, Asia, Russia & CIS. It has five manufacturing plants in India with an annual production capacity of over 450 metric tonnes.

Post the Q3FY21 results, the management had indicated that the API growth outlook remains strong for the next 2-3 years owing to a favourable demand-supply scenario. It also shared that the firm is in talks regarding the monetization of R&D assets and/or a stake sale of Ichnos Science (currently a 100% subsidiary).

For the third quarter of FY 2020-21, Glenmark’s consolidated sales was at Rs. 2761 crs as against Rs. 2657 crs recording an increase of 3.88 per cent. In the same quarter, Glenmark Life Sciences Limited registered consolidated revenue including captive sales of Rs. 501 crs as against Rs. 409 crs, recording a growth of 22.35 percent.

“The India API business grew over 50 percent and the Latam business grew in excess of 30 percent in the third quarter. GLS continues to look for opportunities for the Favipiravir API and has already started supplying in a few countries. During the quarter, GLS submitted nine new DMFs ( drug master files) across various operating markets. The company is looking to file at least 10 -12 DMFs in the fourth quarter of the financial year,” the firm said in its results announcement.

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Ashwin Mohan
first published: Mar 9, 2021 02:23 pm

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