Glenmark Pharmaceuticals Ltd Q2 FY2025 Concall Summary

Key Takeaways

• India outperformance anchors the quarter: The domestic business grew ~1.5x–2x the IPM, driven by dermatology and cardiac, even as the acute respiratory market slowed to single digits.
• ISB 2001 is the high-stakes catalyst: Phase I data showed a 75% overall response rate with a favourable safety profile; management calls it potentially transformational and will present at ASH 2024, with partnering talks to follow.
• U.S. generics remain a drag, with a visible recovery path: Revenue declined 1.2% YoY, but 3–4 launches in Q3, a first respiratory approval in 6–9 months, and a likely Monroe facility restart before year-end underpin the promised turnaround.
• RYALTRIS is the quiet compounding engine: The branded nasal spray keeps gaining share globally, with launches in 10–11 more markets over the next few quarters and a path to becoming a \$200 mn-plus product in 3–5 years.
• What to watch next quarter: The Monroe facility reinspection outcome, the ASH 2024 data presentation and subsequent partnering interest for ISB 2001, and whether the 3–4 planned U.S. launches actually lift the North America top line.

India Business & Branded Portfolio

• Broad-based outperformance: Glenmark grew ~1.5x–2x the IPM, with dermatology and cardiac leading; the acute respiratory market slowed due to seasonality, pulling Glenmark's respiratory business to single-digit growth.
• Lirafit (GLP-1 biosimilar): First-to-market liraglutide biosimilar in India, with strong post-launch traction; supply has been constrained by the complexity of scaling a biological peptide product, but management expects improvement from December.
• JABRYUS (abrocitinib): Launched January 2024 in partnership with Pfizer for moderate-to-severe atopic dermatitis; well received by dermatologists as a novel treatment with improved efficacy and convenience.
• Consumer Care: Candid Powder delivered double-digit revenue growth; the Scalpe portfolio grew revenue 40%, with a key variant recording double-digit growth.
• Oncology partnership: Glenmark signed an agreement with BeiGene to market and distribute tislelizumab and zanubrutinib in India, with launch expected in 6–9 months post regulatory approvals.

Glenn Saldanha: "So I think Q3, while at the secondary level, we will continue to outperform the IPM. I think the overall pharma market will continue to witness maybe low double digit -- low single-digit growth, basically, right, or mid-single-digit growth, right?"

ISB 2001 & the Innovation Bet

• Phase I data: The dose-escalation trial showed a 75% overall response rate in efficacy-evaluable patients, including one stringent complete response; the safety profile was favourable with no dose-limiting toxicities, only one adverse event above Grade 2, and no treatment discontinuations.
• ASH 2024 catalyst: An oral presentation of the first-time Phase I data has been accepted; management believes the asset can be transformational in multiple myeloma and one of the most sought-after assets globally.
• Partnering timeline: Ichnos Glenmark Innovation (IGI) will initiate partnering discussions post-ASH; management is not in a hurry and anticipates a deal most likely in FY26.
• IGI funding endgame: Post-partnership, Glenmark expects it will no longer need to fund IGI; the entity would pursue an independent journey through partnership proceeds and a possible IPO. IGI's spend base will remain at ₹6–7 cr going forward, with focus now largely on ISB 2001 as a single asset and curtailed spend on other assets.
• Dose expansion: Scheduled to initiate in CY2025; the trial is active in the U.S., Australia, and India.

Glenn Saldanha: "With the great data that we are seeing for 2001, we believe 2001 can be transformational, right, for both Glenmark and IGI and globally can be one of the most sought-after assets, right, in the multiple myeloma space with the kind of safety and efficacy data that we are seeing, which we will present at ASH."

U.S. Generics: The Turnaround Thesis

• Current state: North America revenue declined 1.2% YoY; the U.S. generics business has struggled for several years.
• Near-term launches: Q3 looks better with 3–4 new product launches planned; Q4 onwards, numbers are expected to rise further.
• Respiratory pipeline: Two ANDAs for generic nasal sprays are awaiting approval; an ANDA for generic FLOVENT 44 mcg pMDI was filed in May 2024; the first respiratory approval is expected in 6–9 months, with continuous launches thereafter in MDIs and nasal sprays.
• Injectable build-out: Acetylcysteine injection ANDA was acquired, marking the 8th commercial injectable for the U.S.; a few more injectable launches are hoped for in the next 3–6 months.
• Monroe facility: A meeting with the FDA has been completed; management is positive about a reinspection and believes there is a strong possibility of reinitiating commercial production and sales before the end of this year. Monroe products would then start coming to market from late this year or early next year.
• Aurangabad facility: Successfully completed an FDA inspection with zero observations.
• Price erosion floor: Management sees no room for further price deflation in the U.S. generics market given current pressures.

Glenn Saldanha: "We had a meeting with the agency and on the Monroe facility specifically, and we are pretty positive about the agency visiting us and reinspecting. And we think by the -- before the end of this year, there's a strong possibility we may reinitiate commercial production."

RYALTRIS & Global Branded Business

• Global performance: RYALTRIS holds high double-digit market share in Australia, Czech Republic, South Africa, and Italy per IQVIA MAT June data; Hikma (U.S. partner) recorded consistently better YoY performance backed by strong demand and stable supply; Menarini (EU partner) witnessed steady market share increase.
• Geographic expansion: Launched in Mexico in Q2; to be launched in another 10–11 markets over the next few quarters, including 1–2 additional Latin American markets over the next 6 months.
• China pathway: Grand Pharmaceuticals received NDA acceptance; approval is expected sometime in FY26.
• Long-term ambition: Management expects RYALTRIS to keep growing rapidly to become a \$200 mn-plus product over the next 3–5 years; as a branded product, it faces no price erosion and takes inflation-based price increases.
• Europe growth: Strong trajectory driven by robust branded business uptake and sustained growth across all key markets; Glenmark outperformed the overall pharma market in the Czech Republic, Poland, and Slovakia; Western Europe clocked double-digit growth.
• WINLEVI: Approval expected before the end of this year, with commercialization in select European markets starting early next year.
• Envafolimab: Filed in 20 markets; first launches could begin as early as Q4 in 1–2 markets, with multiple launches the following year; it will take at least 2–3 years to reach a certain scale.

Rest of World & Respiratory Portfolio

• RoW decline: Revenue declined 4.1% YoY, coming off a high base last year; full-year FY25 is still anticipated to deliver high single-digit YoY growth on a constant currency basis, with next year returning to 15%–20% growth levels.
• Russia: Secondary sales grew 16% in Q2 and 19% on a MAT September basis; RYALTRIS gained further share.
• Latin America: The respiratory portfolio is a key growth driver; the first generic Salmeterol + Fluticasone MDI was launched in Brazil and did well post-launch.
• Asia: Markets saw a slowdown due to geopolitical challenges.
• Africa: Glenmark ranked 2nd in the overall pharma market in Kenya; RYALTRIS is the leading nasal spray for allergic rhinitis in South Africa.

Margins, Costs & Working Capital

• EBITDA margin guidance: Current year closer to 19%; going forward, 1%–1.5% improvement per year; the second half trajectory moves closer to 19% driven by good launches and RYALTRIS approvals in more geographies.
• Other expenses: Driven higher by increased sales and marketing spend in branded markets (some one-time) and a marginal freight cost increase due to the Middle East situation; full-year guided to ~26% of sales and expected to stabilize during the year.
• Working capital: Debtors rose to 78 days, up from 57 days last year after corrections, and payables were lower; management says this is now the steady state and should remain around current levels.

Guidance & Commitments

Key Metrics