Glenmark Pharmaceuticals posted a 64.4% rise in its net profit at Rs 128 crore for the quarter ended June, on the back of higher sales across geographies and specialty formulations business in India. Glenmark chairman and managing director Glenn Saldanha spoke to Shruti Ambavat on the changing regulatory scene in India and the way forward for the company. Edited excerpts:
What are your views on the laws around clinical trials in India with regards to compensation and permission?
Indian regulatory system is undergoing a change around clinical trials, drug approvals etc. The way the landscape is playing up, I think there is a certain amount of learning that needs to go into the process. So, we are currently going through that learning phase in the country as far as clinical trials are concerned. Government is changing stuff fast and there are lot of changes around the regulatory side for clinical trials and modifications are also required. So, it will take time to settle down.
You have been increasing your R&D spends? Are you focusing more on innovation now?
A bulk of our increased spend is going into generic R&D. We are okay with the amount of spends in terms of NCEs and its pipeline, but most of our incremental spends are going towards R&D expenses in the US market. Our R&D spends for the next few years will be high and is 8.5% at this point.
How many drug approvals are pending with the US Food and Drug Administration (USFDA)?
We have 53 product approvals pending with the USFDA currently and we continue to file 10-15 products every year. We can usually expect to get approvals for 10-12 products in a year. USFDA is pretty stringent across the world, it is not specific to India. There are various manufacturers with outstanding warning letters, including the big guys. Companies will have to be much more vigilant and at the top of their game in order to meet their compliance standards.
What are your capital expenditure plans for the 2014 fiscal?
We will have a total of R300-350 crore capex for 2014 fiscal.
How much is the OTC drugs segment contributing for Glenmark?
The contribution is very small at present since we just launched in the last quarter. Expansion will depend on the product off-take.
Since over 70-75% of your revenues comes from exports, how has rupee depreciation helped the company in its bottomline?
Rupee depreciation on our profit and loss statement has a positive impact because of the revenues we get, whereas on our balance sheet it has a negative impact because of the debt, which is mainly in dollars. You will see the currency impact playing from the second quarter onwards.
What are your performance guidelines for the 2014 fiscal?
We expect a topline growth of 20% for this fiscal and Ebitda margin of 20-21% for the same period.
What is your outlook for this year for the company and the industry?
There are lots of challenges that the industry is undergoing. The emerging markets are slowing down, including India.
It is getting tougher and tougher to get product approvals. We do think for the next few years, we have a pretty robust pipeline and growth model, but if there is a slowdown then automatically our growth will also be slow. Although we will outperform the industry, still it affects everyone.
