Glenmark Pharma: Gaining Market Share, Improving Capital Allocation

Nandan Madhiwalla of Punctilious One presented his investment thesis on Glenmark Pharmaceuticals (India: GLENMARK) at Asian Investing Summit 2023.

Thesis summary:

Glenmark Pharmaceuticals recently traded at a market cap of $1.7 billion, with trailing revenue of $1.5 billion and a trailing P/E multiple of 14x.

Glenmark operates in three segments: India branded generics, active pharma ingredients (83% stake in Glenmark Life Science), and global generics (North America, Europe, ROW).

It also has a biopharma innovation segment, Ichanos Science, which does not have significant revenue. Ichanos has received close to half of Glenmark’s R&D budget over the last several years. The segment has three oncology assets awaiting proof-of-concept data. Glenmark intends to license out the pipeline and slowly reduce its investments in Ichanos. The company plans to focus on growing its branded generics markets along with (separately listed) active pharma ingredients.

Capital allocation is changing positively, away from risky innovation R&D and low return on capital in US generics toward branded generics and debt reduction.

Glenmark continues to outgrow the India branded generics market, its most profitable segment. The Indian business offers significant room for growth, with Glenmark making an aggressive push into chronic therapy areas.

About the instructor:

Nandan Madhiwalla is the founder of Punctilious One and has more than a decade of experience in the investment industry. He has previously worked as a research analyst with PPFAS Mutual Fund – Mumbai, Roosevelt Investment Group and Lebenthal Asset Management in New York. He holds a Bachelor’s degree in Computer Science from D.J.Sanghvi School of Engineering, Mumbai University and a Master’s degree in Financial Engineering from NYU Tandon School of Engineering and is also a CFA Charterholder.