Stock Review: GLENMARK PHARMA

The stock of Glenmark Pharmaceuticals closed 11.5% higher on Monday, following a $613-million (. 2697 crore) outlicensing deal with Sanofi Aventis for the development and commercialisation of its anti-inflammatory novel biologic molecule. The company is receiving a milestone payment of $50 million upfront. The stock had run up on the same lines over a year ago when it outlicensed a novel chemical entity to treat chronic pain to Sanofi Aventis in a deal valued at $ 325 million.

Glenmark is one of the few pharma companies to have successfully monetised the fruits of its innovative R&D. It has cracked an outlicensing deal every year from 2004 to 2007 and after facing a few setbacks in 2008 and 2009, it has revived the trend since 2010. This latest deal reinforces the company's strength in innovative R&D. The deal is also special because it is the first time that an Indian company has discovered a novel biologic worthy of being outlicensed. However, for the company's investors, it has not been a cakewalk. Glenmark's stock has been one of the most volatile in the Indian pharma sector. Though the company has cracked the maximum deals outlicensing its researched molecules, it also has had its fair share of setbacks. Four of the past five molecules outlicensed by it have since been suspended. Despite this, the company has not exhausted its efforts to discover new chemical and biological entities.

Glenmark Pharma, with an annual turnover of . 3,000 crore, spends a modest 4-5% of its sales in R&D. Through all the outlicensing deals entered into till now, the company has earned $185 million (around . 814 crore) as milestone payments. It has a strong pipeline of eight molecules in various stages of clinical development. Even if one among these makes it to the final stage of development and launch, the company will be eyeing at an opportunity not less than $2-3 billion. Investors need be aware the company is involved in innovative R&D that is a high-risk, highreturn venture.

And Glenmark with a proven track record is best placed to make the most of any opportunity that comes its way.