Why Glenmark Pharma Share Price is Rising

On Friday last week, top pharma stocks exhibited an impressive rally, with some witnessing substantial gains of up to 9.5%, sending the Nifty Pharma index up 3%.

Among the notable performers, Aurobindo Pharma recorded a remarkable 6% increase in its share price, while Dr Reddy's Laboratories rallied over 3%.

Several other pharmaceutical companies, such as Abbott India, Torrent Pharma, Divi's Lab, and Gland Pharma, also saw their shares rise by up to 3%.

Glenmark Pharma emerged as the biggest gainer in the Nifty500 index.

The stock jumped more than 10% to Rs 855.5.

Here's why...

#1 Stake Sale Impact

The sudden upward movement can be attributed to the positive outlook regarding the proposed stake sale of Glenmark Life Sciences (GLS).

Nirma, a detergent soap manufacturer, has successfully acquired a substantial 75% stake in Glenmark Life Sciences.

Glenmark Pharma executed a share purchase agreement with Nirma Limited to divest its 75% stake in Glenmark Lifesciences for Rs 615 per share, amounting to Rs 56.5 bn.

Notably, this transaction reflects a slight 2% discount compared to the current market price of Glenmark Lifesciences.

The proceeds from this stake sale will be earmarked to retire Glenmark Pharma's outstanding debt, which stood at Rs 43.4 bn as of FY23.

This move is expected to expedite Glenmark's deleveraging process, fortifying its financial position considerably.

The debt reduction following the GLS sale is projected to significantly alleviate Glenmark's debt-related concerns while simultaneously providing the company with additional liquidity to enhance its innovative pipeline and improve its branded generics business.

Moreover, alongside the stake sale, Glenmark Pharma and Glenmark Lifesciences have extended their business relationship for the next five years.

They have made amendments to their Active Pharmaceutical Ingredient (API) supply and purchase agreement, with Glenmark Pharma committing to procure APIs for Glenmark Lifesciences, commencing from 1 April 2024.

Additionally, an amendment services agreement has been established, where Glenmark Pharma and its subsidiaries will offer support services to Glenmark Lifesciences for a defined duration.

Strong Growth Prospects

Glenmark Pharma, specializing in dermatology, respiratory, and oncology, aspires to assume a substantial role in the complex generics market in the US.

According to media reports, a substantial pool of patent-expired drugs in the US, many of which lack generic competition or face limited competition.

This presents significant market opportunities for generic pharmaceutical companies.

Indian players, including Glenmark Pharma, could benefit from this scenario, especially with the emergence of new complex generic approvals, which could mitigate the erosion in existing markets.

Currently, Glenmark Pharma derives 65% of its revenue from branded segments, with expectations of further growth. The US generics segment constitutes 25% of their business, while the remaining share is attributed to branded business.

Glenmark Pharma is set to intensify its innovation efforts, commencing in FY27 through strategic collaborations.

Furthermore, the company plans to align its research and development (R&D) spending with industry peers, leading to potential margin improvements.

Moreover, on 27 September 2023, Glenmark Specialty SA, a subsidiary of Glenmark Pharma, and Cosmo Pharma NV entered into distribution and license agreements for Winlevi in Europe and South Africa.

This agreement grants Glenmark exclusive rights to commercialize Winlevi in 15 EU countries, South Africa, and the UK, further enhancing the company's performance.

How Glenmark Pharma Shares Have Performed Recently

Glenmark Pharma shares have gained 8.9% in the last five days and more than 11% in the month gone by.

So far in 2023, shares of the company have surged over 98%.

The company touched its 52-week high of Rs 880 on 21 September 2023 and its 52-week low of Rs 363.7 on 27 September 2022.

About Glenmark Pharma

Glenmark Pharma is actively involved in the discovery of new molecules, NCEs (new chemical entity) and NBEs (new biological entity).

It is engaged in developing pharmaceutical product formulation and active pharmaceutical ingredients in regulated and semi-regulated markets.

The company has several molecules in various stages of pre-clinical and clinical development focused in the areas of Oncology, Respiratory and Dermatology.

Its branded generics business has a significant presence in markets across emerging economies, including India.

The API business sells products in over 80 countries, including the US, various countries in the EU, South America and India.

For more details, see the Glenmark Pharma company fact sheet and quarterly results.

For a sector overview, read our Pharma sector report.

You can compare Glenmark Pharma with its peers:

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