Glenmark Life Sciences Ltd IPO

Last Updated: 14 December 2021 8:08 PM by 5Paisa

Glenmark Life Sciences is launching its Initial Public Offering in July 2021.

The IPO will be open for bidding since 27th July 2021 and investors can apply for subscriptions till 29th July 2021. 

Glenmark Life Sciences IPO issue size is of Rs.1,513.60 crore. It will consist of a fresh issue of Rs.1,060 crore and an offer-for-sale by Glenmark Pharma to the tune of Rs.454 crore, which currently holds a 100 per cent stake in Glenmark Life Sciences, Glenmark Life Sciences said in its draft red herring prospectus filed with the market regulator SEBI.

Shareholding Pattern:

Glenmark Life Sciences is one of the leading manufacturer of Active Pharmaceutical Ingredients (APIs). The company was incorporated in 2011 as a wholly-owned subsidiary of Glenmark Pharma. Glenmark Life is a key player in the API space and in India it competes with other names like Divi’s Labs, Laurus Labs, Aarti Drugs, Granules etc. Glenmark Life Sciences is engaged in manufacturing and supply of high-quality APIs to multiple countries in Europe, North America and Latin America. 

Glenmark Life Sciences Limited (GLSL) is a leading developer and manufacturer of select high value, non-commoditized active pharmaceutical ingredients (“APIs”) in chronic therapeutic areas, including cardiovascular disease (“CVS”), central nervous system disease (“CNS”), pain management and diabetes (Source: Frost & Sullivan Report). It also manufactures and sells APIs for gastro-intestinal disorders, anti-infectives and other therapeutic areas. GLSL’s API portfolio comprises specialized and profitable products, including niche and technically complex molecules, which reflects its capability to branch into other high value products. The company have strong market share in select specialized APIs such as Telmisartan (anti-hypertensive), Atovaquone (anti-parasitic), Perindopril (antihypertensive), Teneligliptin (diabetes), Zonisamide (CNS) and Adapalene (dermatology) (Source: Frost & Sullivan Report). GLSL is also increasingly providing contract development and manufacturing operations (“CDMO”) services to a range of multinational and specialty pharmaceutical companies. The company is a research and development (“R&D”)-driven API manufacturer, focused on undertaking dedicated R&D in our existing products and in areas where we believe there is growth potential in the future. GLSL is a wholly-owned subsidiary of our Promoter, Glenmark Pharmaceuticals Limited.

As of March 31, 2021, GLSL had a portfolio of 120 molecules globally and sold our APIs in India and exported our APIs to multiple countries in Europe, North America, Latin America, Japan and the rest of the world (“ROW”). As of May 31, 2021, we had filed 403 Drug Master Files (“DMFs”) and Certificates of suitability to the monographs of the European Pharmacopoeia (“CEPs”)  across various major markets (i.e. United States, Europe, Japan, Russia, Brazil, South Korea, Taiwan, Canada, China and  Australia). As of March 31, 2021, 16 of the 20 largest generic companies globally were our customers (Source: “A Year of Surprises Shakes Up Off-Patent Industry” | Informa, 2020)

Strengths - 
1. Leadership in Select High Value, Non-Commoditized APIs in Chronic Therapeutic Areas
2. Strong Relationships with Leading Global Generic Companies
3. Experienced Management Team with Proven Track Record

1. Leadership in Select High Value, Non-Commoditized APIs in Chronic Therapeutic Areas - 

Company’s API portfolio comprises specialized and profitable products, including niche and technically complex molecules, which reflects their ability to branch into other high value products. As of March 31, 2021, they sold their APIs in India and exported the APIs to multiple countries in Europe, North America, Latin America, Japan and ROW. The total market size in terms of sales for company’s portfolio of 120 molecules globally was estimated to be around US$142 billion in 2020 and is expected to grow by about 6.8% over the next 5 years to reach to about US$211 billion by 2026. The future growth of these products is expected to remain stable driven by the increasing prevalence of non-communicable diseases (including heart disease, stroke, cancer, diabetes and chronic lung disease), growing demand from the regulated markets for drugs indicated for hypertension, diabetes and cancer, and an aging population. The market size in terms of volume for their 120 molecules was estimated to be at 9,959 tonnes in 2020 and is expected to grow at a rate of 6% over the next 5 years to reach to about 12,079 tonnes by 2026. The chronic therapeutic areas covered by their portfolio of 120 molecules accounted for 84% of the US$142 billion end-market size and is expected to become 91% by 2026. The company has gradually built scale and reach in their API offerings through economies of scale in their manufacturing operations and a portfolio build-up which has enabled them to service new markets and explore new product and service offerings to their customers. They work towards developing 8 to 10 molecules each year, which include both high value and high volume APIs. As of May 31, 2021, they had filed 403 DMFs and CEPs across various major markets (i.e. United States, Europe, Japan, Russia, Brazil, South Korea, Taiwan, Canada, China and Australia).

2. Strong Relationships with Leading Global Generic Companies

Over the years, GLSL has established strong relationships with leading global generic pharmaceutical companies that have helped them expand their product offerings and geographic reach. As of March 31, 2021, 16 of the 20 largest generic companies globally were their customers and they enjoy a reputation of trust and reliability with such companies. They have been able to build and strengthen their relationships with them on account of their strong brand equity, high quality products, R&D skills, knowledge of the regulatory environment in the markets where they supply their products and track record of manufacturing APIs at different scales at their facilities, which have been inspected/audited by Indian and key global regulatory bodies such as the USFDA, MHRA, Health Canada and PMDA Japan. As a result, GLSL has able to maintain high customer loyalty with a high rate of repeat customers. For the financial years 2021, 2020 and 2019, approximately 69% of their customers were period-on-period repeat customers. They also have a long history with many of their key customers, including Glenmark, Teva Pharmaceutical Industries, Torrent Pharmaceuticals, Aurobindo Pharma, Krka and another company which is a global leader in generic pharmaceuticals and biosimilars. For the financial year 2021, Glenmark, Teva Pharmaceutical Industries, Torrent Pharmaceuticals and Aurobindo Pharma were among their 10 largest customers by revenue contribution. The term of their relationship with their 7 largest customers averages approximately 5 to 15 years, and approximately 41% of their customers for the financial year 2021 were also their customers in each of the financial years 2020 and 2019.

3. Experienced Management Team with Proven Track Record

GLSL has a a professional and experienced management team led by Managing Director and Chief Executive Officer, Dr. Yasir  Rawjee, who has over 25 years of experience in the global API industry. The operations team is headed by Mr. Vinod Naik who has over two decades of industry experience, R&D team is headed by Dr. Palle V R Acharyulu with several years of industry experience and our Chief Financial Officer, Mr. Bhavesh Pujara has over 15 years of experience in finance. The management team has demonstrated the ability to successfully build a global API business across diverse markets supported by strong R&D, Operations, Quality & Regulatory functions and have integrated the businesses with various operating activities through their cumulative years of work experience.

Glenmark Life Sciences is launching its IPO on 27th July 2021.

Here's a quick look at Glenmark Life Sciences' Financial Status:

Glenmark Life has presented a strong growth story and offers a macro play on the API growth in India. Sales more than doubled from Rs.887 crore in FY19 to Rs.1,886 crore in FY21. The asset turnover ratio (a key driver of profitability) has improved from 0.60 in FY19 to 0.94 in FY21.

Glenmark Life Sciences saw net profits growing 80% in last 2 years from Rs.196 crore in FY19 to Rs.352 crore in FY21. Over the last 3 years, the net profit margins have been 22.1%, 20.2% and 18.87%. During the same 3 years, the return on assets (ROA) were 13.3%, 18.1% and 17.6%. In short, return ratios have been robust and stable in last 3 years.