Zetia generic launch could help Glenmark trim debt: Surajit Pal

Good cash flows from the launch of cholesterol-lowering drug Zetia in December could help Glenmark Pharma trim its debt significantly by the end of the year, says Pharma Analyst Surajit Pal of Prabhudas Lilladher. Glenmark will enjoy 134 days of exclusivity from the launch of the drug.  

Pal, however, believes Glenmark has reasonable growth outlook even on its core business ex-Zetia with its domestic formulations business reporting phenomenal performance in the second quarter.

He also shared his views on the scope of Renvela generic. He says it is an opportunity for multiple companies although as of now there is no proper guidance from US Food and Drug Administration (FDA) in terms of parameters that need to be finalised before approving the generic.Below is the verbatim transcript of Surajit Pal's interview to Prashant Nair and Ekta Batra on CNBC-TV18.Ekta: For Glenmark in particular, what are you factoring in when it comes to Zetia generic as well as debt repayment?A: There is a possibility that they could get USD 150-180 million of bottomline benefit cash from Zetia in 134 days of exclusivity to begin from December. That is very positive in terms of cash flow that will ease the pressure of repayment or prepayment of their loan anyways. So management has guided that a substantial part of that cash which they will generate will go for debt repayment and that they will be doing by the end of FY17 but I believe it will also happen at the end of Q1 for FY18. So, there is quite a good chance.Second thing is that they have given very strong guidance about growth on core business ex-Zetia. So definitely that is one of the big thing.Third point is that, their domestic formulation growth of 11 percent despite having 27 percent growth last year in same quarter was phenomenal in a sense that I believe the focus area for their respiratory, cardiac are going strong. As a result, their ranking has come from 21 to 16 currently. So these are very positive things, so I think that they are going to give the similar benefit that Jubilant has been receiving since August.Ekta: I want to touch upon a couple of stocks. I am going to shift focus to Strides Shasun. Have you managed to look at it and the active pharmaceutical ingredient (API) supply of that particular drug, Renvela, Renagel and how much of a boost it could possibly be for a company like Strides Shasun?A: Renvela, Renagel is a possibility for many companies not necessarily to these companies. There is a possibility for Glenmark, for Lupin and to a certain extent Natco. The management has been guiding that not fiscal, next fiscal -- it is not happening. The fact of the matter what I understood talking to some of the management off the record is that there is no proper guidance that has been made by USFDA as far as Renvela, Renagel in terms of the parameters that has to be finalised before giving approval to any of the genetics. So that is one of the stumbling blocks they are facing because USFDA is coming back and want some different set of data every point of time because USFDA is not clear -- what are the parameters has to be finalised to give the approval -- why anybody has not got any approval other than Sun, the reason is that they have not finalised what should be the parameters to give approvals to any generic in that products. That is the stumbling block. So if Stride is going for that product or not but if that be the case then I don’t find any logic to that.