MOSL: GLENMARK PHARMA (Neutral)-Dismal results-US performance significantly below expectations
​Glenmark Pharma: Dismal results; US performance significantly below expectations
(GNP IN, Mkt Cap USD3.3b, CMP INR759, TP INR800, 5% Upside, Neutral)
- Net sales grew ~11.5% YoY (-2% QoQ) to ~INR24.2b (est. of ~INR30b). This strong disappointment is attributed to lower US sales of INR10b (INR12b in 3Q). EBITDA margin came in at 17%, below our estimate of 33%, due to ~USD50m lower US sales, R&D expense of ~14.5% and forex impact of ~INR1.4b. PAT increased 23.5% YoY to INR1.8b (est. of INR6.2b).
- Significant miss in US numbers; muted growth in India: Although the US business grew 53% YoY to INR10b, it was below our estimate of INR13.8b, primarily due to lower-than-expected sales from Zetia and price erosion of >10% in the base business. Zetia would have contributed sales of ~USD45m in 4Q v/s estimate of ~USD95m. GNP reduced its Zetia sales guidance to USD180-200m (prior: USD200-250m). Although the company should have booked 4.5-5 months of sales by March quarter, GNP stated that it has booked only 3.5 months of sales by now and the rest will come in 1Q. India business reported only 6% YoY growth due to the impact of demonetization. Europe business declined 15% YoY.
Glenmark Pharmaceuticals is engaged in the discovery of new molecules, both NCEs (new chemical entity) and NBEs (new biological entity), with seven molecules in various stages of clinical development & pre-clinical development. Co.'s Drug Discovery business primarily focuses in the areas of inflammation, metabolic disorders and pain. Co.'s Formulations business focuses on therapeutic areas such as dermatology, anti-infectives, respiratory, cardiac, diabetes, gynecology, CNS, and oncology. Co.'s Glenmark Generics Ltd. business focuses on developing, manufacturing, selling and the distribution of generics through wholesalers, retailers and pharmacy chains.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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