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Glenmark Pharmaceuticals
Key takeaways – call with head of US
Event
We spoke to Terrance J. Coughlin, head of US business at GNP late last
week. He maintained the US business (FY11A sales ~US$182m) has the
potential to grow b/w 20 to 25% in FY12. We maintain GNP as our top pick
with a TP of Rs465.
Impact
GNP has >10% market share for the launched OC products: The market
has been concerned about GNP’s ability to gain share in the OC space. GNP
highlighted that they have already gained >10% market share in the 4 OC
products launched in FY11. Recently approved Ortho Tri-Cyclen (market size
of US$226m) gets launched in July. The total market size for the hormonal
product approved for GNP in the US is now ~US$380m. With an expanding
portfolio (3 to 4 more OC approvals expected in CY11) and entry barriers for
competition, OC could be a growth driver for GNP.
Oxycodone: GNP now has more than two-thirds market share in
Oxycodone (5 mg capsule and 20 mg /ml solution) with market size of these
strengths being ~ US$18m. GNP has also informed the FDA that they
have ample supply of Oxycodone (to prevent shortage when other players are
forced out). GNP’s Citizen Petition (CP) is pending with the FDA for Oxycodone
requesting the FDA to adopt the same stringent API standard for all other ANDA
and NDA filers as LVT (GNP's partner) was subjected to. If granted this could
mean additional regulatory hurdles for competition going forward. We have
US$15m & US$30m in sales for GNP from the product in FY12 & FY13.
Dovonex (Calcipotriene): Taro launched this product in 2HFY11 and is
currently promoting the product in the US with its 60 strong derma sales force.
Mar-11 IMS data puts this brand annualizing at US$7m with a strong
prescription pick-up. The current market size for Calcipotriene products is
US$240m and we have factored Taro garnering 15 to 20% market share at
peak. GNP gets ~ 35% royalty on this product from Taro with a Quarter lag.
Felodipine: Glenmark launched Felodipine ER (Plendil) in 4QFY11. The
opportunity is lucrative; given limited competition (3 players) and market size
~ US$85m. GNP has already gained ~ 20% market share on this product.
Malarone & Cutivate: Under settlement these products get launched in Sept-
11 & Mar-12 respectively and should contribute ~US$20m in sales in FY12.
Earnings and target price revision
No change.
Price catalyst
12-month price target: Rs465.00 based on a Sum of Parts methodology.
Catalyst: Crofelemer approval
Action and recommendation
Valuations look attractive in our view, with GNP trading at a PER of 12x
FY12E earnings, adjusted for exclusivity and NCE value. Our Top pick.
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