SHAREKHAN View on Glenmark Pharmaceuticals. Glenmark Pharmaceuticals Recommendation: Buy Price target: Rs915 Current market price: Rs782 Price target revised up to Rs915; upgraded to Buy Key points Gearing up: Glenmark Pharmaceuticals is stepping ahead to gain from its key novel molecules and generic products pipeline built over the past few years in the US, Europe and the Latin American market. While the Q2FY2015 results already reflected a bounce back in Latin American (up 139%) and European business (up 25%), the US business is likely to crack the stagnation with a fresh wave of approvals nearing and its first-to-file (FTF) opportunity on genetic Zetia (market size $1.3 billion) ticking in Q4FY2017. Near-term upside from GRC 17536: The company is said to be in advance stage of talks with a few multinational players to out-licence its novel molecule GRC 17536, which has successfully completed phase-II clinical trials on 138 patients in Europe and India. GRC 17536 is expected to have a market potential worth $1 billion. A successful out-licencing deal would earn the company a sizeable amount of upfront payment, developmental milestone based payments and royalties on sales. We expect the out-licencing deal to close in the next few months. We revise price target up to Rs915; upgraded to Buy: We anticipate an increased run rate of product approvals in the US market over FY2016-17 and a decent upside from monetisation of novel molecule GRC 17536 (though not factored in our price target as the out-licencing deals remain under negotiation stage). We revise our price target up by 13% to Rs915 which includes Rs860 for base business (16x FY2017 core EPS), Rs55 for its R&D pipeline and Rs10 for its exclusivity opportunity on generic Zetia. We upgrade our recommendation to Buy on the stock.
Posted on: Mon, 29 Dec 2014 20:47:55 +0000
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