We are overweight on Glenmark Pharmaceuticals Ltd with a target price of R686. We value the base business of Glenmark using the P/E methodology at 18x (unchanged, in line with current valuations) December 2015e EPS of R35. We continue to value other opportunities on an NPV basis and add R15 each for gZetia and Crofelemer and R25 for the NCE pipeline (unchanged).
We remain overweight on the back of near-medium growth expectations in the respiratory portfolio in emerging markets, derma and oral contraceptive portfolio and few visible launches in US. Increasing specialty focus is attractive longer term. The Crofelemer launch in emerging markets is in FY15, a key event to watch.
Glenmark Pharmaceuticals has filed a declaratory judgment against Sanofi Aventis seeking outcome on ?340 patent? that currently blocks approval of generic version of Desmopressin tablets in US. This is one of those troubling cases where generic approval for a company is held up by the presence of more than one exclusivity despite other generics in the market.
Limited competition in gDDAVP indicates an attractive opportunity for Glenmark.
Glenmark Pharmaceuticals is ramping up its filings in specialty therapies such as dermatology and oncology in the US, though the company still lacks a big-ticket product in US in near term. We expect increasing US run-rate nonetheless, owing to approvals in telmisartan, telmisartan + hydrocsholorothiazide, eszopiclone and fluocinonide in the near term. Medium-term launches in gZyvox and gZetia are most interesting catalysts.
HSBC
