Glenmark Pharmaceuticals Limited (GLENMARK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '27 Earnings Conference Call of Glenmark Pharmaceuticals Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Utkarsh Gandhi, Senior General Manager, Investor Relations of Glenmark Pharmaceuticals. Thank you, and over to you, Mr. Gandhi.

Thank you, Rindu. Good morning, everyone, and welcome to the Q1 FY '27 Earnings Conference Call of Glenmark Pharmaceuticals Limited. Before we start the Q&A, let us quickly review the performance of the business in the first quarter. For the first quarter of FY '27, Glenmark's consolidated revenue from operations was at INR 40,185 million as against INR 32,644 million in the corresponding quarter last year, recording a Y-o-Y growth of 23.1%. Quickly covering our key regions, starting with India. Sales from the formulation business in India for the first quarter was at INR 14,321 million as against INR 12,399 million in the corresponding quarter last year, recording a growth of 15.5%. Glenmark continued to significantly outperform the IPM in terms of secondary sales as per IQVIA. Glenmark's India formulation business recorded a growth of 18.1% in Q1 and 14.3% as per MAT June 2026 compared to IPM growth of 12.2% and 10%, respectively. Glenmark continued to sustain strong growth in its core therapy areas like dermatology, respiratory, cardiac and oncology. Glenmark India business is ranked 13th, with a market share of 2.37% as per IQVIA MAT June 2026. The company has 11 brands in the IPM top 300. In terms of core therapy areas, Glenmark is ranked 2nd in dermatology, 3rd in respiratory and 4th in the cardiac segment as per IQVIA MAT data. Glenmark has launched some key products in core therapy areas in the last 12 months, which have been driving growth. Some of the notable ones are Tevimbra and Brukinsa in Oncology, which are partnered with BeOne. In a short period, these 2 brands have seen a very strong uptake in the market and the company expects these brands to further gain momentum and [indiscernible] contribute to India business growth. On the respiratory side, Glenmark launched Nebzmart GFB Smartules and Glenmark AIRZ FB Smartules, which is the world's first nebulized fixed-dose triple therapy for COPD. And Glenmark's strong growth in the chronic respiratory segment has been led by differentiated market -- first in market launch of this product. In terms of the Consumer Care business in India, primary sales for GCC in Q1 were INR 1,558 million with a Y-o-Y growth of 28%. The company's flagship brand Candid recorded revenue growth upwards of 30% across all its variants, and LA SHIELD portfolio delivered mid-single-digit growth in Q1. However, Scalpe and Bontress recorded very high growth in the first quarter. Other skin brands, such as Elovera and EPISOFT also continued a strong trajectory during the quarter. North America. The North America business recorded revenue of INR 10,974 million for the first quarter of FY '27, which is translating into a Y-o-Y growth of 41.1%. Net of the deferred out-licensing income recognition for ISB 2001, the core business Y-o-Y growth for North America region was 19.8% in the first quarter. During the quarter, Glenmark launched 9 products consisting of a mix of prescription and OTC products. Some of the notable ones are methylene blue injection, sodium phosphate injection, vancomycin injection, olanzapine injection, progesterone vaginal insert and calcium gluconate injection. Glenmark is looking forward to several new approvals in the second quarter as well. In the last 6 months, Glenmark has strengthened its generic respiratory franchise with the first ANDA approval of fluticasone propionate 44 mcg, which is generic to Flovent HFA. Glenmark was granted a CGT designation for this product as the first approved applicant and is eligible for 180 days of exclusivity upon commercialization. Glenmark also received approval for fluticasone propionate nasal spray OTC. And during the quarter, Glenmark also initiated entering commercialization of Ryaltris, leading the brand strategy, market access and customer engagement in the U.S. Glenmark filed 2 additional ANDAs for differentiated MDI products in the third quarter of last year, including the ANDA for fluticasone propionate 110 mcg, which is generic to FloVent HFA 110 mcg, and for ipratropium bromide inhalation aerosol, which is generic to Atrovent. The company is working on additional respiratory filings across MDIs and nasal sprays. In injectables side, Glenmark has built a large portfolio of 20 plus commercial injectable products through various partners. Glenmark's injectable manufacturing facility in Monroe, received EIR with VAI classification from the U.S. FDA in November of '25. And during the quarter, Glenmark relaunched fulvestrant injection out of the Monroe facility. Glenmark's marketing portfolio through 30th June 2026 consists of 225 generic products authorized for distribution in the U.S. The company has -- currently has 53 applications pending in various stages of the U.S. FDA approval process. Moving to Europe. Glenmark's Europe operations revenue for the first quarter of FY '27 was INR 7,472 million as against INR 6,678 million, recording a growth of 11.9%. While the overall regional growth was muted during the first quarter, the branded portfolio recorded good growth across markets. The company continues to focus on sustaining the increasing contribution from the branded markets/portfolio in Europe in the respiratory and dermatology therapeutic areas. Glenmark's respiratory portfolio also gained momentum across multiple markets with market share increases across MDIs and nasal sprays. Ryaltris continued to gain market share across countries where the product has been launched by -- on our own or through partnered -- through our partner Menarini. In addition, there are 8 other respiratory products commercialized across various markets and additional 2 to 3 launches are expected in the next 12 to 18 months. In the branded dermatology portfolio, Winlevi has gained traction since its launch in the U.K. during the first quarter of FY '26, and that has also received MA approval in the European markets and is launched in select markets across the CEE region, Spain and the Nordic countries. Glenmark also received approval for Hilkota foam in the Nordic countries. This portfolio will be further augmented with additional products over the next 12 months. Emerging markets. For the first quarter of FY '27, revenue from the emerging markets region was INR 7,304 million as against INR 5,721 million, recording a Y-o-Y growth of 27.7%. As per IQVIA MAT May 2026 data, Glenmark's Russia business recorded strong secondary sales growth of 12-plus percent. Amongst the dermatology companies, Glenmark moved up rank and is now ranked 8th as per IQVIA. Glenmark's LATAM and MEA regions also recorded very strong growth during this quarter on the back of continued market share gain in key therapeutic areas. Glenmark's overall respiratory portfolio continues to perform the covered market across the EM regions. Ryaltris continues to be the leading nasal spray for allergic rhinitis in most of the markets where the product has been launched. Glenmark plans to launch Ryaltris in Brazil in the second half of FY '27. In the APAC region, double-digit secondary sales growth was led by strong outperformance in key markets such as Malaysia, Vietnam and Australia. Ryaltris was also approved as mentioned earlier in China and Thailand in Q4 and has been launched by the company's respective regional partners, Grand Pharma and Organon. Moving on to our global innovative portfolio, starting with Ryaltris. So I think we mentioned a few of the key highlights of Ryaltris. As of June, marketing applications for Ryaltris have been submitted in more than 90 countries across the world and the product has been commercialized now in 57 markets. Further, it is expected to be launched in 10 markets over the next few quarters. As we mentioned earlier, China and Thailand have been some of the recent launches and Glenmark's partner Moldova also launched products. Glenmark initiated the U.S. commercialization as well during the quarter and as per IQVIA data across markets, Glenmark has seen -- Ryaltris has seen a robust performance in terms of both value and unit market shares and continues to record global secondary sales growth of upwards of 40% Y-o-Y. Winlevi. As mentioned, the company launched Winlevi in the U.K. in Q1 and saw a strong uptake throughout the year. Winlevi also received approval in Europe in October. In the first quarter, Glenmark launched Winlevi in several European markets including the Nordics, CEE countries and Spain. And in Portugal also, Glenmark launched the product through a strategic partner and Winlevi is also currently under regulatory review in South Africa, where Glenmark had submitted the marketing authorization application. QiNHAYO, which is envafolimab, partnered with Jiangsu Alphamab and 3D Medicines. Glenmark has filed QiNHAYO marketing authorization applications in 24 countries as of June. The first commercial launch is expected in FY '28. The company in parallel initiated early access or named patient programs across 7 markets, including Kenya, Mauritius, Uganda, Philippines and Tanzania for the supply of QiNHAYO. And Glenmark also initiated a global multicenter Phase III study in neo-adjuvant and adjuvant treatment of patients with acceptable Stage IIIa and IIIb non-small cell lung cancer. Trastuzumab Rezetecan partnered with Hengrui Pharma. Glenmark has advanced preparations for initiation of MA applications for Trastuzumab Rezetecan. This is a next-generation HER2-targeting ADC in-licensed in Q2 last year from Jiangsu Hengrui. The company expects the first wave of MA applications to begin in Q2 FY '27. In June 2026, Glenmark initiated a Phase III clinical trial of Trastuzumab Rezetecan in platinum-resistant ovarian cancer, or PROC, in India following the approval of the DCGI. Glenmark also plans to enroll patients in Australia and South Korea, subject to regulatory approvals. Aumolertinib partnered with Hansoh. As mentioned earlier, in Q3 last year, Glenmark has in-licensed Aumolertinib, which is a third-generation EGFR TKI for the treatment of non-small lung cancer. Aumolertinib is already approved in the U.K. in June 2025 for the first-line treatment of adult patients with locally advanced or metastatic NSCLC with activating EGFR mutations. Hansoh also received MA approval in the European markets in Feb 2026. Glenmark had submitted MA application for Aumolertinib in 13 countries as of June 2026, and the first commercial launch is anticipated during the second half of FY '27. Moving on to IGI. Some of the key updates on our pipeline products, ISB 2001 or ABBV 2001. To date, more than 160 subjects have been dosed in the TRIgnite Phase I study, 42 of which were in dose escalation and more than 120 patients in dose expansion. Safety and efficacy data from all subjects continue to be promising and are consistent with the data previously presented at ASCO 2025. A multicenter Phase I/II multicohort combination study in multiple myeloma and other myeloma -- antimyeloma therapies has been initiated and there's a clinical trials link available to give the details. ISB 2301, the next asset in the IGI pipeline is our first in class multi-specific immune cell activator targeting solid tumors and IGI intends to submit an IND later this year. And ISB 2302, which is a bispecific immune modulator and ISB 2501, a trispecific T-cell engager, are both in early preclinical development. You can view more updates on the IGI pipeline assets on the IGI website. From the Glenmark management team, we have Mr. Glenn Saldanha, Chairman and Managing Director; and Anurag Mantri, Executive Director and Global CFO. I'll now hand it over to Glenn for his opening comments.

Thank you, Utkarsh. Good morning, everyone, and thank you for joining us today on the Q1 earnings call. We have begun FY '27 on a very strong note delivering consolidated Y-o-Y revenues of 23%. Even if you exclude the deferred income from 2001, the base business Y-o-Y growth is north of 18%. This performance was broad-based across all our key markets. India business sustained its continued outperformance in the core therapies as well as strong momentum in oncology through Tevimbra and Brukinsa launches. As guided earlier, our North America business reported a strong recovery on the back of respiratory launches and we expect this growth to sustain over the next few quarters. Our emerging markets business also recorded a very strong performance in the first quarter, while Europe was muted as we are transforming our presence there through expansions in the branded respiratory and dermatology segments. Our branded portfolio continues to do well across the markets. Ryaltris is growing upwards of 40% in terms of secondary sales in Q1 and we've also expanded the launch of Winlevi to other new markets. We continue to work on our partnered innovative oncology portfolio and are expecting to launch Aumolertinib towards the end of FY '27, followed by Trastuzumab Rezetecan and envafolimab. Innovation remains central to our long-term growth at Glenmark. ISB 2001 ABBV-2001 continue to show promising safety and efficacy with more than 160 patients dosed to date and we are excited about the progress of IGI's pipeline assets, including 2301 and 2302. Overall, we remain focused on disciplined execution, strengthening our base business, scaling up our specialty portfolio across markets and continuing to progress the IGI pipeline forward over the course of the year. With this, I will hand it over to Anurag Mantri for his opening comments.

Thank you, Glenn. Good morning, everyone, and thank you for joining us today. We have started FY '27 with a broad-based growth across all our regions. The improved mix has also helped maintaining our gross margin in spite of the increased cost due to the ongoing geopolitical situation. As highlighted during our Investor Day, we are reinvesting in our base business as well as innovative business expansion. This coupled with the increase in cost of shipments and overall logistics has impacted our overall operating margins to some extent. While depending on the geopolitical situation and the development, some of the cost increases will continue to impact the business, but we are working on to minimizing the impact on our profitability through superior product and geographical mix. Our working capital initiatives help generate incremental income through interest rate arbitrage. The associated interest income is clubbed under the other income in the P&L and the increase is apparent in this quarter. While gross interest costs have gone up, this is mainly on account of higher lease expenses, bank commitment charges and various other interest arbitrage thing which is the income is booked in other income, but the interest cost comes under -- in this side. As a result of various measures implemented, our overall earning profile and visibility has improved considerably, and we remain committed to maintaining a gross debt 0 position in our balance sheet. Overall, we have delivered a strong quarterly performance and are on track to achieve our guidance as a part of Glenmark 3.0 journey. Thank you.

So with that, Rindu, we can open the floor up for Q&A.

[Operator Instructions] The first question comes from the line of Damayanti Kerai with HSBC.

My first question on your R&D spend. So can you call out the spend for the quarter? And since you have planned to move ISB 2301 to clinical trials later this year, after that, what kind of incremental R&D you anticipate? That's my first question.

So R&D spend for this quarter was around INR 289 crores. And which is -- going forward, as we guided earlier in that R&D spend is continue to be around 7% to 8% overall. This quarter was a bit lower, but it's actually -- I cannot be exact with phasing out of the R&D spend, and it will continue as per our guidance.

Also on -- as we guided, right, IGI, the spend will be around INR 70 million. And this includes the investment in 2301 Phase I and all the investments in the clinical trials that we anticipate over the next 2 to 3 years. It's all included in that INR 70 million that we will continue to burn in IGI.

Sure. So you have the comfortable funding position to take care of this spend, which is required for moving assets to [indiscernible]. My second question is on Europe. Can you talk a bit more like what has changed? Because I think this the second quarter when we are seeing the trend.

So if you look at our European business, right, we -- the last 4 years, we've been among the fastest growing. Our European business has contributed significantly to the company, right, over the last 4 years. And if you remember our guidance, we said Europe will come to high single digit this year, right? The other thing about Europe that we are doing is we are working aggressively to move to focus more on our branded products in Europe, which is mainly the products in the respiratory and we have several respiratory and derm launches, right, which will drive the growth of Europe. So I think this year, we'll finish probably at high single digit for our European business. However, I think as these branded launches start gaining scale, right, we will get back to double-digit growth from next year, right, for our European business. But again, just to remind you, we were the -- it's been the fastest-growing geography for 4 years continuously. So very strong business for us.

Sure. And if you can just say some quantitative number, what percentage of European segment sales is contributed by branded products right now? And where do you want to take it, say a few years down the line?

So today, it is small relatively, right, around 30% of total revenues, right? But we see that number -- if you take a 5-year view, right, that should go to about 60%, 60-odd percent, right, over the next 5 years. That's the kind of focus we are bringing to the branded products across Europe.

Okay. That's helpful. And my last question is on your injectable pickup in U.S. segment. So you mentioned 20-plus products, including the partner projects. So when we look at the contribution coming from the injectables, is that meaningful in the current number? Or you think it will build up over the time?

It will still take time. I mean most of these are commodity injectables, right? We have some good launches and some good products, but it will still take some time to contribute to the overall revenue profile of the U.S. business, right? The U.S. business, if I look at the U.S. business this year, the primary drivers are the respiratory launches, so fluticasone 44 then fluticasone nasal spray OTC, which we've launched. And in the second half of this year, we have at least 2 or 3 more respiratory launches. So I think which will help drive the performance of the U.S. business this year. All in all, we should have a good year in the U.S. this year. Next year, I think some of the Monroe differentiated injectables will start contributing next year for the U.S. business in addition to all the respiratory work that we are doing, as you know which are in H2, right, which will also help the U.S. this year.

[Operator Instructions] Next question comes from the line of Harshit Dhoot with Dymon Asia.

Sir, on this cost part, how should we understand the RM cost impact, the increase in API cost because of this ongoing war situation and supply disruption? How it can impact your gross margins and how sustainable this impact will be? How should we understand the gross margin outlook, sir?

So as I mentioned in my opening remarks, basically, the geopolitical situation is impacting our gross margin, which is across the API cost as well as the logistic cost. So we are seeing the cost pressure across. We are trying to mitigate it with the -- through the better product mix and the better geographical mix. So that we are trying to. And that's the reason you can see that the margin was impacted, but not to the extent of the impact we are seeing across the API packing material as well as the logistic cost. Going forward, it will depend on how the situation evolves in the geopolitical situation, if it subsides. But I think in the future quarter also at least 2 quarters, we can -- we see the pressure coming up on -- because of this, and we'll try our best to mitigate through the product and geographical mix.

But sir, assuming situation remains stand still, the elevated situation remains continued, then how it will impact the margins, around 1%, 2%? Can you please help qualitatively on that?

I think the way to think of the business, right, is given the new launches and the respiratory launches in the U.S., right, given our strength in our India business, right, the growth in the India business, all that we are hoping will clearly offset any pressure that we are seeing on account of the elevated cost due to the war. So overall margins, we are pretty comfortable. I think on a full year basis, what we've guided to that 21%, 22% will clearly be there, right, on the overall margin of the company.

Next question comes from the line of Kunal Randeria with Axis Capital.

So first question is on the India business, quite a strong performance, and it's also mirroring the secondary data that we see in IQVIA. So Glenn, maybe while the secondary data has always been very strong, I think this time around, we see that convergence. So is there any change that has happened? And going forward, would that be a good indicator on how we should model the domestic business?

Well, as we've always said, our domestic business is really a fantastic business, right, in terms of the quality of the brands, the quality of the franchise across the board, right? And even if you look at the domestic business today, I mean, most of the segments we operate, cardiovascular, we are growing 15-odd percent. Dermatology continues to do well for us. Respiratory, particularly chronic resp, over 25-plus percent growth. So all these, coupled with Tevimbra and Brukinsa, we did over INR 100 crores of sales in the first 12 months of launch, right, which is remarkable. So India is a very strong franchise for us. And I think if you have to model it going forward, you can easily assume that we will have between 12% to 15% growth on a consistent basis from here on for the entire India business.

Right. Glenn, but your top 3 brands still are like Telma or its extensions. So you have a very high concentration risk in some way. So do you see any risk to its growth prospects?

On the contrary, I think having strong brands is a positive. That's the view we have, right? So having brands like Telma, Ascoril, Alex, Candid and some of the newer products, right, our OTC franchise, standard powder, now with this Tevimbra and Brukinsa, I mean, there's so many different -- the strength of the portfolio is extremely strong, right, across the board. So we don't see any risk to the performance in our India business.

Sure, sure. And Glenn, you've also invested quite a bit of innovative products so -- organically as well as in-licensing. So barring R&D, other than R&D, any kind of OpEx like marketing costs that you'll have to do to market these products in Europe or emerging markets, additional cost, beyond what you already do?

So we are already doing that, right? I mean if you see, we are investing in building out or strengthening our oncology commercial capabilities, particularly in emerging markets, right? And that has -- that's why we are making some investments this year. And that's why our margin we are guiding to is 21% to 22%, right? Because these investments are more for preparation of the launch of Aumolertinib, followed by Trastu Reze, followed by envafolimab. And these 3 brands can give us almost INR 500 million, INR 600 million over a 5-, 6-year time frame, right? And then, of course, we'll use the same infrastructure to launch ISB 2001 when available. So that will give us a very strong oncology franchise, particularly in India and all of emerging markets. So I think we are continuing to make these investments, which is all built into the margin that we guide to.

All right. Right. And one more, if I can squeeze in. ISB 2301, it's in -- I think should we expect a deal this year? Or will it be after Phase Ia similar to what you saw in ISB 2001?

So on -- 2301 is a super exciting asset, right? I mean we've -- it's a penta-specific, which globally puts us at the world stage in terms of innovation, right? No one has ever bought -- tried to target both NK cells as well as activate T cells, right, along with these tumor antigens. So it's a very, very novel concept overall. And from a deal perspective, clearly, we will wait until at least we get some data -- clinical data in humans and get some POC before we even start looking at potential partnering.

Next question comes from the line of Tushar Manudhane with Motilal Oswal Financial Services Limited.

Sir, 2 questions. One, on 110 mcg, the product being filed, where do we stand in terms of approvals or any additional queries? That's first.

Yes. I mean we are -- as we said, in H2, right, second half, right, we should see some of these respiratory products getting approved. We anticipate at least 2 or 3 of these getting approved, right, between 110, fluticasone nasal spray, Rx, ipratropium, all this, right? In the second half of this year, you should see -- my hope is at least 2 of these 3 come through.

Got it. And the one which is already launched, have we had, in a way, full quarter benefit from -- in terms of business? Or we are still to see the real meaningful impact?

I wouldn't say a full quarter. I would say half the quarter, we saw some benefit, but I think this Q2, we'll see the full quarter financial out of fluti 44.

Got it. And sir, secondly, on ISB 830 with BioCryst, is there any rethink from their side that is as far as the agreement is concerned? And then subsequent extension to that, that since the product is now about to complete Phase II. So -- and is there any scope for having an agreement with alternate companies or more number of companies on this asset?

ISB 830 -- we moved a backup compound, right, called STAR-0310. So it's actually in Phase I, right? It's just completed Phase I, right? So that's the stage at which we are at. In terms of BioCryst, we have no visibility to what they are doing in terms of further development yet, right, because they just acquired Astria some time ago. So we are still trying to figure out what the next steps are on that.

[Operator Instructions] Next question comes from the line of Krish Mehta with Enam Holdings.

I had 2 questions. The first is if you could provide the current working capital and net cash position for the quarter. And the second question I had is on -- Glenn, you spoke about 12% to 15% growth in India. If you could just give some color on how this growth would be split in terms of volume versus value and new product launches?