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Glenmark received an approval for Verapamil ER tablets for 120mg and 180mg which would
enable it to get market share. This adds on to its existing limited competition pipeline of Ursodiol,
Oxycodone and generic Malerone in US. Momentum picking up in OC's and its R&D initiaves are
other positives. Buy.
List of limited competition products expands
Glenmark has received final USFDA approval for Verapamil extended-release (ER) tablets
(120 mg and 180 mg), generic version of Isoptin SR© tablets by Ranbaxy (used for the
treatment of Hypertension), which completes Glenmark’s marketing portfolio for the existing
Verapamil product line as it had an approval for 240mg since Sept2009, but was not able to
make significant contribution (as never gained market share) due to incomplete product
basket (12 month period ending March 2011 achieved sales of US$52m).
We expect this product to be a limited competition product with Teva (approved to Ivax since
1992), Mylan (approved since 1996) and Par Pharma (approved since 1999) to be the only
other players. Assumming 25% price erosion on the generic market of US$52mn and 15%
market share, this product could add US$5.8mn to its US revenues and US$4mn of PAT on
an annualised basis.
Earlier in July, Glenmark has received final USFDA approval for Ursodiol tablets (generic
version of Urso 250 and Urso Forte tablets by Axacan) indicated for the treatment of
gallstones. Sales achieved for Ursodiol tablets were US$60m of which branded sales was
US$15m and generic sales by Teva was US$45m -as per IMS for 12 months ending March
2011. Glenmark would be the 3rd player to market these tablets (greater competition seen in
the capsule market) thereby making this a limited competition drug. Assumming 30% price
erosion on the generic market of US$45mn and 20% market share, this product could add
US$8mn to its US revenues and US$4.5mn of PAT on an annualised basis.
This adds on the existing limited competition product pipeline for Glenmark - Oxycodone
(ramping up market share now) and generic Malerone (expected launch in Sept-Oct 2011).
Momentum picking up in Oral Contraceptives (OCs)
The recent approval of Norgestimate and Ethinyl Estradiol tablets (gTri-Cyclen) marks
Glenmark's 4th oral contraceptive (OC) product and 5th hormone product approval for the US
market. As per IMS, this product has total market sales of US$226m for 12 month period
ending March 2011. This is already a generic product but marketed as branded generics due
to limited competition. There are only 3 players in the market - Ortho McNeil Janssen
Pharmaceutical, a division of Johnson & Johnson (innovator), Teva and Watson. Glenmark
expects to launch the product soon and start monetising the same.
With this approval, Glenmark would be addressing total market size of US$365m (as the
earlier 4 female hormonal product approvals were addressing small market sales of only
US$140mn). Glenmark remains the only Indian company to be granted ANDA approval for an
OC product. Glenmark indicates that it had made 15 filings as of now (which has 5 approvals
now) - the remaining 10 filing would address market sales of US$580mn.
Momentum picks up in R&D initiatives
GRC 15300 - completes the Phase-I; expect US$5m - Glenmark successfully completed the
Phase I trial of GRC 15300, a first in class TRPV3 - inhibitor, for treatment of pain which
entered clinical trials. Sanofi has licensed the rights to all therapeutic indications and had
earlier paid an upfront licensing fee of US$20m (and the development, regulatory and
commercial milestone could reach upto US$325m+ royalties on sales). Company expect
milestone of US$5n in 3QFY12. Plans are in place to initiate clinical proof of concept studies
in neuropathic pain.
Glenmark receives US$15m for Crofelemer supplies - On July 18, 2011, Salix's Pharma
entered into an Amended Supply Agreement with Glenmark Pharma where Glenmark agrees
to manufacture and supply to Salix agreed quantities of crofelemer. Salix has paid Glenmark
an advance of $15 million against the commitment fee and agreed to pay the remaining $6.6
million of the commitment fee in five equal annual instalments.
GBR 500 - US$ 50m payments received - In May 2011, Glenmark out-licensed its GBR 500
molecule to Sanofi Aventis, the first novel biologics out-licensing deal by an Indian pharma
company, with an upfront payment of US$50m. Potential milestone receipts could total
US$613m plus royalty payments and rights to sell in a few markets (India, etc). We ascribe a
value of Rs20/share after applying a 20% success probability rate and building in a delay of
three years in commercialisation.
Thus Glenmark's GBR 500 licensing deal with Sanofi Aventis re-validates its business model
of investing in innovative R&D. Glenmark seems well poised to benefit from the reviving
interest in in-licensing from big pharma as we believe its NCE pipeline is not fully priced in
yet.
Reiterate Buy with TP of Rs375
We value Glenmark's base business at 19.3x FY12F PE (a 10% discount to its peers vs 15%
previously), which yields a value of Rs317. To this we add Rs55 for its NCE pipeline and
Rs3.5 for one-off Para IV products, resulting in a target price to Rs375. Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Glenmark received an approval for Verapamil ER tablets for 120mg and 180mg which would
enable it to get market share. This adds on to its existing limited competition pipeline of Ursodiol,
Oxycodone and generic Malerone in US. Momentum picking up in OC's and its R&D initiaves are
other positives. Buy.
List of limited competition products expands
Glenmark has received final USFDA approval for Verapamil extended-release (ER) tablets
(120 mg and 180 mg), generic version of Isoptin SR© tablets by Ranbaxy (used for the
treatment of Hypertension), which completes Glenmark’s marketing portfolio for the existing
Verapamil product line as it had an approval for 240mg since Sept2009, but was not able to
make significant contribution (as never gained market share) due to incomplete product
basket (12 month period ending March 2011 achieved sales of US$52m).
We expect this product to be a limited competition product with Teva (approved to Ivax since
1992), Mylan (approved since 1996) and Par Pharma (approved since 1999) to be the only
other players. Assumming 25% price erosion on the generic market of US$52mn and 15%
market share, this product could add US$5.8mn to its US revenues and US$4mn of PAT on
an annualised basis.
Earlier in July, Glenmark has received final USFDA approval for Ursodiol tablets (generic
version of Urso 250 and Urso Forte tablets by Axacan) indicated for the treatment of
gallstones. Sales achieved for Ursodiol tablets were US$60m of which branded sales was
US$15m and generic sales by Teva was US$45m -as per IMS for 12 months ending March
2011. Glenmark would be the 3rd player to market these tablets (greater competition seen in
the capsule market) thereby making this a limited competition drug. Assumming 30% price
erosion on the generic market of US$45mn and 20% market share, this product could add
US$8mn to its US revenues and US$4.5mn of PAT on an annualised basis.
This adds on the existing limited competition product pipeline for Glenmark - Oxycodone
(ramping up market share now) and generic Malerone (expected launch in Sept-Oct 2011).
Momentum picking up in Oral Contraceptives (OCs)
The recent approval of Norgestimate and Ethinyl Estradiol tablets (gTri-Cyclen) marks
Glenmark's 4th oral contraceptive (OC) product and 5th hormone product approval for the US
market. As per IMS, this product has total market sales of US$226m for 12 month period
ending March 2011. This is already a generic product but marketed as branded generics due
to limited competition. There are only 3 players in the market - Ortho McNeil Janssen
Pharmaceutical, a division of Johnson & Johnson (innovator), Teva and Watson. Glenmark
expects to launch the product soon and start monetising the same.
With this approval, Glenmark would be addressing total market size of US$365m (as the
earlier 4 female hormonal product approvals were addressing small market sales of only
US$140mn). Glenmark remains the only Indian company to be granted ANDA approval for an
OC product. Glenmark indicates that it had made 15 filings as of now (which has 5 approvals
now) - the remaining 10 filing would address market sales of US$580mn.
Momentum picks up in R&D initiatives
GRC 15300 - completes the Phase-I; expect US$5m - Glenmark successfully completed the
Phase I trial of GRC 15300, a first in class TRPV3 - inhibitor, for treatment of pain which
entered clinical trials. Sanofi has licensed the rights to all therapeutic indications and had
earlier paid an upfront licensing fee of US$20m (and the development, regulatory and
commercial milestone could reach upto US$325m+ royalties on sales). Company expect
milestone of US$5n in 3QFY12. Plans are in place to initiate clinical proof of concept studies
in neuropathic pain.
Glenmark receives US$15m for Crofelemer supplies - On July 18, 2011, Salix's Pharma
entered into an Amended Supply Agreement with Glenmark Pharma where Glenmark agrees
to manufacture and supply to Salix agreed quantities of crofelemer. Salix has paid Glenmark
an advance of $15 million against the commitment fee and agreed to pay the remaining $6.6
million of the commitment fee in five equal annual instalments.
GBR 500 - US$ 50m payments received - In May 2011, Glenmark out-licensed its GBR 500
molecule to Sanofi Aventis, the first novel biologics out-licensing deal by an Indian pharma
company, with an upfront payment of US$50m. Potential milestone receipts could total
US$613m plus royalty payments and rights to sell in a few markets (India, etc). We ascribe a
value of Rs20/share after applying a 20% success probability rate and building in a delay of
three years in commercialisation.
Thus Glenmark's GBR 500 licensing deal with Sanofi Aventis re-validates its business model
of investing in innovative R&D. Glenmark seems well poised to benefit from the reviving
interest in in-licensing from big pharma as we believe its NCE pipeline is not fully priced in
yet.
Reiterate Buy with TP of Rs375
We value Glenmark's base business at 19.3x FY12F PE (a 10% discount to its peers vs 15%
previously), which yields a value of Rs317. To this we add Rs55 for its NCE pipeline and
Rs3.5 for one-off Para IV products, resulting in a target price to Rs375. Buy.
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