Stock Review: Glenmark Pharma

The USFDA nod for Oxycodone will strengthen the company's generic business in the US

Glenmark tasted more success in the US market, with an approval from the US Food and Drug Administration (USFDA) earlier this week for launch of Oxycodone generics in a five mg capsule and a100mg/5ml oral solution.

The announcement was made jointly by its subsidiary, Glenmark Generics, and Pennsylvania-based Lehigh Valley technologies (LVT), as they also signed a new supply and marketing agreement. According to the deal, LVT will manufacture Oxycodone, an analgesic in generic form, for Glenmark's exclusive marketing and distribution.

However, LVT will retain exclusive marketing rights to the branded version of the Oxycodone product line, as well as its additional strengths in both generic and branded forms. The two approved strengths had market sales of $13 million in the US during the 12 months ended September, according to IMS health data.

Glenmark generic's performance in the US has been robust, with revenues rising 26 per cent to `223.8 crore during the second quarter of the current financial year. Limited competition launches like Malorene, Cutivate, Oxycodone, Calpotriene and Tarka in the US will continue to drive growth. Glenmark expects $200 million in revenues from the US during 2010-11.

It is also betting big on the oral contraceptives market, with three new products and 13 ANDAs (abbreviated new drug applications).

The domestic business, too, has seen consistent growth. Domestic revenues surged 22 per cent year-on-year during the September quarter. The strong dermatology range (Candid, Candid-B) as well as anti-hypertension brands (Telma and Telma-H) have been significant growth drivers. Glenmark is eyeing 18-20 per cent growth from the domestic segment, 30 per cent from Latin America and 10 per cent from semi-regulated markets. With the launch of Crofelemer, an HIV-related anti-diarrheal, in the next two years, any positive on NCE (novel chemical entity) can act as a trigger.

Analysts at Emkay peg 2010-11 adjusted profit at 4,712 crore (up 58 per cent year-on-year). The stock, at 352.7, trades at 20 times 201011 earnings.